The last time I sat down to write my article many of us were readying ourselves for the Holiday’s and end of year sprint to the finish. I, like many of you, was scrambling a little trying to figure out how to get everything I needed to do done right and on time. Thanks to great support from my personal and union families everything that was outstanding was finished 100% and we enjoyed a successful close to 2023, both personally and professionally. The final quarter of the year was also a big success in the US investment markets as well. That huge run of positive market performance from November 1st – December 31st was just what our Pension, Welfare, and Annuity Funds needed.
After spending the year worrying about and preparing for the impact of another poor investment year on our funds, the final 2 months of market performance gave us a dream finish for 2023. After ten months that would best be described as uncertain, our Pension Fund finished 2023 with an investment return of just over +11.6%. As a reminder our Fund suffered a -10.5% loss in 2022, after three strong consecutive years of investment gains from 2019-2021 where the fund recorded investment returns of +16.66%, +10.33% and +12.17%. As great as those 4/5 years may appear, the reality is that the negative impact of the 2022 investment year should actually read as -17.75%. In addition to the -10.5% loss, the Pension fund also didn’t achieve its +7.25% investment projection for the year either. So unfortunately, the net result of those 4/5 strong years is flat because of the severity of the loss in 2022. Our investment consultants from SEI have done a great job for all of us since taking over the management of the funds invested assets and we have high hopes for positive investment returns and more Pension Fund successes working with them into the future.
The folks at SEI are also responsible for managing the invested assets of our Health and Welfare Funds as well. The H&W Fund finished 2023 with a strong investment return as well, posting a +6.59%. However, just like the Pension Fund, the H&W Fund also had a tough 2022, posting a -7.55% loss. Also, in line with our Pension Fund investment returns from 2019-2021, the H&W Fund had gains of +11.08%, +6.48%, and +2.84% over that time. Although there are significant differences in the level of assets, the investment assumptions, and the types of assets used to reach those assumptions in the Pension and the H&W Funds the goals for our invested assets are the same, the generation positive cash flow. Those additional dollars help cover the funds administrative expenses as well as offset increased H&W claims experience as well as monthly pension payments.
Our Local 1500 Annuity Fund assets are managed by an investment team at UBS. So far, our team from UBS have proven themselves an asset to both our fund and its participants. Since our fund’s inception in late 2015, our Annuity Fund assets have grown from a few hundred thousand dollars to more than $36.5 million dollars at the close of 2023. The most significant difference between the Annuity fund and the Pension fund is that every dollar contributed goes directly into an account earmarked for each participant in the fund and when a participant leaves, they can take that money with them. Two things impact the value of each individual account, the administrative costs to operate the fund, which are divided among all the participants each year and the investment returns. In 2023 our Annuity fund had a return of +9.99%, which equated to more than $3 million dollars. Over that same period the fund received contributions of just over $8.6 million dollars. Like all our other funds our Annuity fund had a tough investment return in 2022, losing -9.65%. From 2019-2021 however, the Annuity fund had a collective positive investment return of over +27%. As the Annuity funds’ assets grow over the next few years it will be easier for the Board of Trustees to improve on the services already provided by making your daily account balances visible to you via an online portal.
So many factors impact our investment managers’ ability to successfully achieve our funds investment assumptions each year. And although some of them are more cyclical and potentially forecastable, other factors, like war and natural disasters, are not. We all know that 2024 will play host to another Presidential election cycle which can and usually does cause market fluctuations as individual investors prepare for the worst while praying for the best outcome. In many ways our Union has the same difficulty projecting our year. We know when our contracts expire, and what is needed to properly service our membership. For the most part we can even predict the number of members we will have at year’s end, but there are many other factors that we cannot project. Mergers, organizing victories, bankruptcy filings, new technology, and store closings are the factors that are most impactful on our membership and our Union every year. In some cases, especially when looking at store closings and new technology, our members will know what is coming long before we do.
The faster you communicate what you hear or an issue you have to your Union Rep the faster they can follow up on it. Your Reps all have a great deal of work to do every day and you are their best asset when it comes to getting their jobs done. One of the most important things you should be communicating to your Reps are issues with your paycheck. We are less than three months into the year and two of our Reps have already discovered and corrected large payroll issues in 3 different companies that we represent. In one case, a Rep discovered and was able to successfully resolve a significant scheduling inaccuracy which resulted in over $20,000 in back pay for our members. As much as we review your payrolls and schedules monthly there is always a possibility that we miss something. Having you keep that constant line of communication open and asking your Rep questions is the best way to ensure that you get everything that you are entitled to. So, as the snow shifts to rain, and the daylight gets a little longer, give your contracts and recent settlement recaps another read and make sure that you are maximizing your return on your investment in your Union contract. If there are things you don’t understand, or you think something is wrong reach out to your Rep immediately.
As always, I want to thank you for the privilege of being your President and wish you and your families a safe and healthy Easter and Passover season. Looking forward to seeing you all soon, stay safe in the shops! #OurUnionHasValue