Understanding the Annual Funding Notice

Defined benefit plans are designed to provide plan participants with a benefit at retirement based on the Plan’s formula.  In order to help ensure sufficient funds exist to pay for these future retirement benefits, contributions are made into a trust fund and that money is set aside for plan benefits and invested based on established investment guidelines.  The Plan’s funding policy and investment policy are outlined in the attached Notice.  Federal guidelines and reviews made by outside actuaries who look at both how much is in the trust (assets) and future obligations for benefits (liabilities) can impact the timing and amount of contributions. 

The asset and liability measures used by our outside actuaries to determine annual minimum required contributions to the Plan for 2008, 2009 and 2010 are summarized in the “Funding Target Attainment Percentage“ chart on page 1 of the Notice.  These values are as of September 1 of the respective year. 

Also on page 1 of the Notice, you’ll see the “Year-End Assets and Liabilities“ section.  This section shows plan assets and estimated liabilities as of August 31, 2011.  These values are calculated differently than those used to determine the Funding Target Attainment Percentage (page 1).  Our actuaries are preparing the annual actuarial valuation for August 31, 2011.  This actuarial valuation will include a more precise measure of the liabilities.

Full Issue: No. 200 - December 23, 2011

Back to CSI Pension Updates