PLAN OPERATION:

The CWA/ITU Negotiated Pension Plan (NPP), which began in 1967, is a defined benefit plan with an equal number of trustees representing the employers and the employees.  It conforms with all applicable laws and governmental regulations,
and is administered at the Plan Office in Colorado Springs, Colorado.  The Plan is available to any CWA bargaining unit,
and benefits are portable from one contributing employer to another.

The NPP is a model among multi-employer plans.  There are 28,000 active participants and pensioners, 450 contributing employers, and net assets available for benefits of $1 billion.  Each month the Plan pays out  $7 million in benefits.
 

CONTRIBUTIONS:

Contributions to the Plan are made based on the terms of a collective bargaining agreement.  Contributions may be negotiated on a cents per hour, dollars per day, or percentage of earnings basis, but they must be on a uniform basis for all individuals.
To help in negotiating the Plan into the agreement, participation in the Plan can also be offered to management and the other employees, provided the employer does not discriminate.  Contributions are tax-deductible for the employer and not taxable
to the employee until a benefit is actually received.  Suggested contract language is available for review.

Upon completion of negotiations, the Plan Office should be supplied with a copy of the signed agreement, the name and address of the employer, and a complete listing of employees.  Once the information is received, the Plan Office will supply
the new contributing employer with pre-printed monthly remittance forms and instructions for their use.
 

TAX ADVANTAGES:

Participation in a pension plan can not only provide financial security for retirement, but also provide tax advantages.  A tax-qualified plan can deliver much higher returns on pre-tax contributions than individuals investing after-tax wages.  Indeed,
if  higher wages are negotiated in lieu of employer contributions, federal income tax, state income tax and F.I.C.A. (Social Security and Medicare) would be deducted, probably leaving the individual with just 65% of those higher wages.  By negotiating contributions instead of higher wages, employees can postpone income tax until they start receiving benefits, and often pay a lower tax rate after retirement.  Moreover, neither the employer nor employee ever pays F.I.C.A. on employer contributions. Therefore, tax planning using a tax-qualified pension plan should be a consideration in bargaining to get a higher investment return and a more favorable tax treatment.
 

ADVANTAGES TO EMPLOYERS:

The NPP is a jointly trusteed plan, which means that the Employer's needs and interests are represented by an equal number
of Employer Trustees on the Board.  Employers may deduct contributions, and they save on F.I.C.A. tax to the extent they make contributions in lieu of higher wages.  The NPP tries to make participation by contributing employers as easy as possible.  The NPP provides preprinted monthly reports for remittance purposes, mails annual statements to participants, handles all regulatory reporting and compliance, and efficiently administers the Plan.
 

INVESTMENTS:

The assets of the Plan are invested to meet the Plan's long-term investment goals without undue risk.  Fourteen different professional investment management firms do the investing, which gives the portfolio diversification among different investment styles and sectors.  In addition, the Trustees use a  professional investment consultant to monitor the performance of the managers and advise the Trustees.  The investment target allocation is:  60% in equities, 25% in fixed income, 7% in real estate, 5% in hedge funds and 3% in private equity.

The NPP has been in existence for 39 years, and its investment performance has allowed the Plan to grow to its present size, while making numerous improvements in Plan benefits.  For example, investment performance enabled the Trustees to grant
a $25 increase to pensioners in 1998, a $20 increase in 1996 and a 13th "bonus" check to pensioners in 1992, 1994, 1997, 1999, and 2000.  The Trustees have also increased accrued benefits earned to date for working participants in 1996, 1998 and 1999.
 

MERGERS:

The NPP has been very involved with the merging of local or regional plans (47 plans have merged since its inception).  In this way, a truly national Plan was created, which permits portability.  For instance, the former CWA Labor-Management Pension Fund with 695 active participants merged into the NPP in 1989.  Within a few months of that merger, the pensioners in that plan received the $13 per month increase granted to all NPP pensioners, an increase that would not have taken place without the merger into this Plan.  All Persons involved in a merger will receive what they already accrued under the provision of the former plan plus the benefits they earn under the NPP after the merger.  In most cases, the benefit formula under the NPP is superior to that of the merged plan.

If you need further information, Please contact the NPP office toll free at (877)429-2488.
 

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