New AMO Defined Contribution Plan in effect April 1
The revised AMO Defined Contribution Plan effective April 1 enhances retirement security significantly for all AMO members through a more equitable benefit calculation and distribution formula that relies exclusively on length of service in AMO covered employment.
Under this revised plan, participant age is no longer a factor, and the rates of employer contributions into AMO Defined Contribution Plan individual accounts are drawn from one chart instead of two (Schedule 3.0).
These rates will increase steadily and substantially over the course of an AMO career in the deep-sea, Great Lakes and inland waters sectors.
Much of the immediate direct benefit goes to AMO members with 10 years or more of AMO covered employment. The new contribution rates are 10 percent at 10 years, 12 percent at 15 years and 15 percent at 20 years or more. The new rates cap at 20 percent at 30 years or more of AMO covered employment.
These contribution rates will rise every other year, and each will apply to increased earnings as AMO members upgrade their licenses or otherwise advance to senior vessel positions.
Applicants for AMO membership who earned their licenses through a maritime academy or who advanced through the Seafarers International Union, and who have less than 10 years of AMO covered employment or combined AMO-SIU time, earn 1 percent in AMO Defined Contribution Plan benefits in each of the first three years - a rate that will escalate quickly through 10 years of service.
These progressive AMO Defined Contribution Plan rates are in addition to earnings from the AMO 401(k) Plan and the AMO Pension Plan Money Purchase Benefit where applicable.
The intent is to encourage applicants to plan on 20 years of AMO covered employment as they see their AMO Defined Contribution Plan accounts grow with their additional retirement savings over a brief time, and as they anticipate reaching the 10-year service mark.
These specific incentives could discourage a common practice in which newly licensed officers take their earned AMO Defined Contribution Plan account balances with them as they look for employment ashore or elsewhere at sea after completing three years - the maximum vesting period allowed under federal law.
A total of 1,129 newly licensed officers left AMO employment between 2010 - the year the AMO Defined Contribution Plan was launched - and 2019.
AMO members credited with 10 years of AMO service or combined AMO-SIU service for pension purposes are "grandfathered" to ensure that they never receive less than their current employer contribution rates.
Under the new contribution rate schedule, 70 AMO members covered previously under the 100 percent chart are "grandfathered" at their high rates while they remain in their jobs aboard the 100-percent ships.
AMO members who qualified for and accepted in-service lump-sum payouts from the defined benefit AMO Pension Plan before that option was eliminated in December 2009 are held to an employer contribution rate of 3 percent, regardless of years of service since receipt of the in-service lump-sum pension checks. Today, 90 in-service lump-sum pension recipients remain active in the AMO fleets.
Deep-sea, Great Lakes and inland waters AMO members will receive individual AMO Defined Contribution Plan statements indicating how the new benefit schedules affect their individual retirement savings accounts. These statements will be mailed this week.
"Each AMO member with less than 10 years of AMO or AMO-SIU service will also receive a direct comparison between the rate and contribution in effect before the revision of the DC Plan and the rate and contribution in effect beginning April 1," said AMO Plans Executive Director Steve Nickerson. "As these members continue their AMO careers, they will know when their account balances overtake those in place had the prior rates continued - they will see considerable and lasting improvement."
AMO National President Paul Doell said the "redrawn" AMO Defined Contribution Plan is "a real breakthrough for the AMO membership on several levels."
No applicant for AMO membership will "earn as much in DC Plan retirement savings as AMO members with 10 years or more of service," Doell added. "But applicants will see the real value of planning careers with our union."
No engine or deck officer signing on with AMO after extended service outside of AMO covered employment - and who may already have a retirement plan in place - "will ever again earn more in DC Plan benefits than an AMO member working alongside of him simply because the newcomer is older."
The joint union-employer trustees of the AMO Defined Contribution Plan approved the revised Plan after several weeks of lengthy discussion and analysis, including consideration of nine different working models of how to determine and distribute benefits in the fairest possible way.
"I am forever grateful for the significant support of our late friend Mike Finnigan in achieving this long-sought reform," Doell concluded. "Mike joined me in representing the AMO membership in these preparatory sessions with AMO Plans administration and staff. He applied his unmistakable savvy and style to the conversation, and I will always appreciate that."