What are the Old Hire plans?

Old Hire plans cover employees hired prior to April 8, 1978, whose employers chose to affiliate with FPPA for certain administrative functions but maintained independent status outside of our larger Defined Benefit System. These plans are managed by FPPA and are no longer adding new members. As a result, these plans primarily consist of members who are retired.

Thus, these plans are ‘winding down’ and will only exist until they have finished paying benefits to existing members and their beneficiaries. More than 50% of the remaining Old Hire plans have 10 or fewer payees.

What does this provision do?

This provision allows the Board to set contribution policies for so-called Old Hire plans that are different from other plans currently managed by FPPA, in order to address the unique needs of each plan. This policy is focused on:

• Stabilizing the annual required contribution
• Maintaining the funded ratio of the plan

Why is this necessary?

This action allows FPPA to manage affiliated Old Hire plans more effectively as they reach the end of their lifespan.

Taking this action allows the FPPA Board to pursue a more individualized funding approach for each Old Hire plan. This policy helps employers better predict annual contributions by allowing plans nearing closure to invest more conservatively than those plans that expect to pay benefits for a longer period of time.

BOTTOM LINE: THE OLD HIRE PLANS ARE WINDING DOWN, MAKING THEIR NEEDS DIFFERENT THAN FPPA’S LARGER DEFINED BENEFIT PLANS. THIS PROVISION HELPS ENSURE THAT THESE PLANS ARE ABLE TO WIND DOWN GRACEFULLY WHILE ENSURING THEY CAN PROVIDE THE BENEFITS PROMISED TO THEIR MEMBERS.

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