We are pleased to announce that as plan partners we have come to agreement on the provisions in the Agreement in Principle.
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Inflation Adjustment Account

There are no changes to the lifetime pension benefit for retired members.

Plan partners and the board have and continue to strengthen the plan’s inflation protection in three ways:

  • After the 2015 valuation, the plan partners introduced sustainable COLA and made the decision to increase contributions to the Inflation Adjustment Account (IAA).  In 2015 dollars, that was worth at least $3 billion. Because retired members make up about a third of the membership, that means at least $1 billion is directly benefitting current retired members. That decision, in 2015, also helped increase the initial sustainable COLA (Cost of Living Adjustment) cap to 1.95%.
  • In accordance with the board’s funding policy, excess investment returns have been moved out of the basic account into the IAA. That happens when the five-year annualized rate of return exceeds the actuarially assumed rate of return. That has totaled about $1.2 billion since 2015.
  • The plan partner’s plan design proposal includes provisions that ensure future surpluses, after first resolving any funding shortfalls that arise, will be shared equally between the IAA (to further support inflation protection) and the Rate Stabilization Account (RSA), which is used to reduce the likelihood of contribution rate increases for active members and employers. In other words, future surpluses will be used to benefit both retired and active members.