Public Employee Press

Annuity Fund: $50 million and growing

The assets of the DC 37 annuity plan have grown to nearly $50 million in fiscal year 2005, up from $36 million five years ago. During the 2005 fiscal year, which ended June 30, after deducting administrative fees, the plan earned a 5.55 percent rate of return.

In August, the union sent annual statements to the more than 75,000 members who have accounts in the DC 37 Annuity Fund Plan. The plan was established under the 1995-2000 economic agreement, which called for the city to contribute up to $522 into municipal employees’ personal accounts. That basic investment has grown to $627.54.

But about 7,000 of the account holders have significantly higher nest eggs because their locals have negotiated to allocate additional funds toward recurring payments into the annuity. Some DC 37 economic agreements have included flexible funds that bargaining units can use to boost annuity contributions or devote to other options.

“The key to the annuity and the way to get the biggest bang for your buck is to make regular and steadily increasing contributions as you negotiate,” said Local 1320 President James Tucciarelli, who chairs the DC 37 Annuity Committee.

A few years ago, account holders lost money when administrative expenses outstripped earnings. Since then investments have grown as the trustees cut administrative costs and switched to a more aggressive investment allocation, with 35 percent in stocks. The rate of return was 1.13 percent in fiscal year 2002, 7.9 percent in 2003 and 3.3 percent in 2004.

Local 1320 is among several DC 37 locals that have negotiated recurring annuity contributions from the city. Local 1320 members, for example, receive $3.76 a day in their accounts, which have grown to more than $4,000 for members covered from the beginning.

The total number of union members with annuity accounts has actually fallen by about 5,000 over the years as members have retired or switched jobs. The fund is now closed to new city employees unless they are in locals with recurring annuities.

The DC 37 Health and Security Plan has a unit devoted to day-to-day operations of the annuity. The unit processes applications from members who are leaving the city work force and want to roll over their account into another retirement plan or individual retirement account, maintain their account, or seek a cash disbursement.

Participants may only withdraw the funds when they leave the city work force. A 10 percent penalty applies when an account holder takes a cash disbursement before reaching age 65.

Outgoing city employees should call the unit at 212-815-1888 to initiate the computerized application process before visiting the unit to address their particular concerns.