Friday, March 17, 2006

Individual Account Plan

The Individual Account Plan (IAP) is the second part of the union's three part pension plan. It's an account into which money is deposited for you, and which earns interest. I like talking about the IAP for a couple of reasons: it vests in a single year, so everybody gets it, and it accumulates as a lump sum, so it's easy to understand. The IAP didn't exist until 1979, and only started as 25 cents per hour worked, which was paid by the employer into an individual account. This bumped up to 30.5 cents/hr in 1982, and stayed there until Tom Short became IATSE president. He immediately made beefing up the IAP a priority, and starting in 1997 the employers began contributing 1% of our minimum weekly scale into the IAP. That percentage has steadily increased to 5% now, and will go to 5.5% in Aug. 2007 and 6% in Aug. 2008. Let's do an example. Say your minimum scale in your job class is $1414.56, and you work 50 weeks (at 40 hours per week) this year. (For this example, ignore that the minimums will bump up in August.) Your IAP will receive $610 for your hours worked (2000 hours x 30.5 cents), plus 0.05 x 50 x $1414.56 (5% of 50 weeks of your minimum scale), or another $3541.40, for a total of $4151.40. Not bad. In the last year of our new contract, with the increases to the minimums, and the increase to 6% of the minimums, that same example would come to $5214 for the year. Now we're getting somewhere! In addition, the IAP receives residuals and supplementary market money that overflows from the health plan. When the health plan has sufficient reserves, the residual and supplementary market money goes into the IAPs of union members working that year. Due to escalating health care costs, that hasn't happened in several years, but for the first five years of my animation career money from these sources was the biggest contribution into my IAP. Also, if you have unclaimed vacation and holiday pay, it will go into the IAP. Finally, the IAP is conservatively but actively invested, and has averaged a healthy 8-10% per annum growth since its inception. So even if you only work a few union years early in your career, by the time you retire you will likely have a nice chunk o' change awaiting you. So, briefly, the highlights: - One year vest. As before, a qualified year is only 400 or more hours worked in a calendar year. - Account total based on hours worked, minimum salary, unclaimed vac. and holiday pay, residuals and supplementary markets, and compounded interest. - Claim as lump sum or annuity. - Don't forget to claim it when you retire!


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