In a surprising and disappointing move, NEA is proposing that NSO, AFSE, and NEASO agree to suspend the June 25, 2007 Memorandum of Understanding (MOU) concerning the NEA Retirement Plan. However, at the same time, NEA is requesting the parties reopen negotiations on the details in the MOU.
In a March 22 memo to NSO, AFSE, and NEASO, Derrick Johnson, NEA’s Director of Human Resources,writes, “Given the number of factors that are having a significant impact on the future viability of the Plan, . . . NEA is seeking to open negotiations in order to address the challenges that we face. As another option, NEA proposes that the parties agree to temporarily suspend the MOU and its requirements pending further discussion.”
NSO President Chuck Agerstrand said, “I find this very concerning. I’ve asked Brian Sullivan, NSO’s appointed Trustee to the NEA Pension Board, to contact affiliates affected by this news. NSO will work with the NEA and our union partners to review the issues and make every effort to address our members’ concerns.”
The MOU resolved a dispute over converting the Retirement Plan from a Single Employer status to a Multi-employer status. Participating affiliates were concerned that a Multi-Employer Plan would lead to serious underfunding and reduced benefits. In the eight years the MOU has been in effect, it has sustained funding at a healthy level. The agreement is coming to the end of its 14-year timeline to reach full funding.
Some troubling challenges have developed that are making it more difficult to reach full funding by December 31, 2021. Those challenges include lower than projected return on investments; longer life spans of Plan participants; a reduction in the ratio of active to retired participants; and lower than anticipated salary increases.
“The parties are hoping to make modifications to the MOU that will still provide for adequate funding levels for the foreseeable future, while still avoiding prohibitive contribution rates,” Sullivan told affiliates.
Currently, 25 affiliates are covered under the NEA Retirement Plan.
Agerstrand said, “We will be carefully reviewing the plan documents and consulting with our affiliates affected by any changes before we enter into negotiations.”