December 2003
TO: Participating Employers
FROM: Office of the Administrative Manager
RE: Trustee Policy on Acceptance of Employer Contributions
This is the tenth in a series of Bulletins issued to assist Employers in their monthly Pension Reporting of contributions and in understanding the various aspects of Trust administration.
The Trustees, effective April 1, 2000, amended the long-standing Policy On Acceptance of Employer Contributions to provide the bargaining parties with greater flexibility in structuring their participation in the Trust. The amendments to the Policy allowed the parties to labor agreements to:
- Negotiate a lower pension contribution rate for regular full and part-time employees serving a probationary period. This break-in rate may be applied to new employees for the contract’s defined probationary period, but in no event for a period that exceeds ninety (90) calendar days from the first day of employment;
- Negotiate provisions to apply different pension contribution rates within a single bargaining unit for substantially different job descriptions or classifications.
In addition, the Policy was amended to require that contributions be remitted according to a formula which provides, at a minimum, for contributions on all straight time hours worked, and that vacation and holiday hours must be included as straight time hours.
Many employers have negotiated a break-in contribution rate, usually $0.10 per hour, for regular full- and part-time employees serving a probationary period. The break-in rate must be calculated from an employee’s first day as a probationary employee and runs for consecutive calendar days, regardless of intervening layoff or discharge. Therefore, after initial implementation of the break-in rate provision, the break-in rate cannot be applied to employees who have been re-hired and serve a second probationary period, unless the employee has never had a break-in rate paid on his/her behalf with this employer.
Many employers participating in the Trust have re-negotiated their labor agreements to implement multiple pension contribution rates, or to change their contribution formula to now remit contributions on a minimum of all straight time hours including vacation and holiday hours.
Payroll audits have revealed that modifications to the labor agreement as described above require the employer to also modify its payroll system to match remittance practices with the new requirements of the labor agreement. THIS MAY REQUIRE SYSTEM PROGRAMMING, WHICH SHOULD BE UNDERTAKEN AS SOON AS POSSIBLE TO AVOID REMITTANCE ERRORS, AND RESULTING INTEREST OR OTHER CHARGES.
For example, numerous employers have negotiated provisions that provide for pension contributions based on an annual maximum of 2,080 hours. If this provision is negotiated, it is imperative that your payroll system accumulates hours throughout the year and that once an employee has reached the maximum, contributions are no longer reported to the Trust for the year.
Enclosed with this document is the Trustee Policy on Acceptance of Employer Contributions effective April 1, 2000.
Your consideration of this information is appreciated, as are your inquiries regarding labor agreement issues or reporting to the Trust. We welcome your questions, which should be directed to the Contract Review Supervisor in your Administrative Office.