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Class Action Settlement

In late 1987, a court-approved settlement was finalized in a class action lawsuit (Dutchak and Sullivan) which for many years had been pending in United States District Court in Chicago. Distribution of Retirement Benefits based upon this settlement began in early 1988 and will continue until December 31, 2015 (and, as to monthly lifetime pensions based on the settlement, other than disability pensions, until the post-2015 death of the pensioner or survivor). Material terms and conditions of the class action settlement, insofar as it modifies the Plan, are summarized in the following.

Vested Pension (Contribution-Based Pension)

This benefit was introduced in 1976 to comply with ERISA. For most participants who terminated Participation before 1999, this benefit requires 10 years of Vesting Service, including three years after 1970. The settlement rolls back the clock and permits the 10 years of Vesting Service to occur at any time (except that pre-1965 continuous employment without employer contributions is disregarded).

Break in Service

The settlement also rolls back the clock in determining loss of credit because of a Break in Service (“Break”). While the basic Break rules are not changed, the settlement provides that a participant is entitled to the Break rule that is both relevant and most advantageous to his circumstances. The time element of a Break in Service is unchanged by the settlement:

  • Five consecutive One-Year Breaks before April 1, 1969;
  • Three consecutive One-Year Breaks between April 1, 1969 and December 31, 1975; or
  • Five consecutive One-Year Breaks after 1975.

Regardless of the time frame of the One-Year Breaks, the participant will not sustain a Break in Service unless and until the total of his consecutive One-Year Breaks equals or exceeds the total of his years of Vesting Service (since his latest Break in Service, if any).

The Plan has long exempted service in any other pension plan with which the Plan has a reciprocal agreement from the calculation of a Break-in-Service; the settlement extends this exemption to any other “pension plan established by collective bargaining” of a labor organization affiliated with the International Brotherhood of Teamsters. Such service will not result in any combined credit, because of the absence of a reciprocal agreement, but the time of service will be disregarded for Break in Service purposes.

Break in Service: Effect of Filing Claims Late (frozen Benefit Rule*)

This summary also re-publishes a 1971 Plan interpretation which, independent of (but fully preserved by) the settlement, protects a participant from any subsequent Break in Service (“Break”) with respect to certain Retirement Benefits in which he already has vested rights (i.e., has satisfied minimum age, service, contribution and other eligibility prerequisites) when his credit or covered service (covered employment) ends, whatever that date may be. Once the participant's benefits claim is received by the Plan, even if it is after the time in which a Break would have occurred, the Break is disregarded and the clock is rolled back to examine the participant's eligibility at the end of his covered service (covered employment). If he is eligible for a Twenty-Year Service Pension, Early Retirement Pension, Contributory Credit Pension, or a Monthly Disability Benefit as of that earlier date, it is payable to the participant beginning in the month after his retirement date or in the 6th month after his total and permanent disability begins, as the case may be (unless there is a suspension of benefits because of Restricted Reemployment). If the participant sustains a total and permanent disability or dies after his covered service (covered employment) ends but before he sustains a Break, then upon proper application either the Monthly Disability Benefit or an appropriate survivor pension will be payable, provided that all eligibility requirements are met.

Monthly Disability Benefit

The settlement also rolls back the clock in determining the commencement date for payment of Monthly Disability Benefits. Until 1976 the general commencement date - the 6th month after the total and permanent disability begins—was postponed until, if later, the 3rd month after the Plan received “due proof of such disability.” That “due proof” limitation was permanently removed in the 1976 amendment of the Plan, which applied only to post-1975 disabilities. The settlement removes the “due proof” limitation with respect to disabilities that began prior to 1976. The settlement also provides $10 and $15 increases in the amount of the Monthly Disability Benefit.

Special Hardship Committee

The settlement establishes a Special Hardship Appeal Committee of Trustees, which supplements the administrative appeal procedures of the Plan and which is responsible for reviewing appeals and granting benefits in cases in which the Trustees determine both that substantial justice warrants deviation from specific eligibility criteria of the Plan and that one of the following circumstances has been shown:

· The participant demonstrates that his failure to become eligible for a particular Retirement Benefit is the result of either written misinformation from a Plan employee or inadequate or tardy dissemination of information about the Plan's terms and conditions of benefit eligibility or about his particular eligibility status; or

· The participant demonstrates that (a) he is entitled to at least 20 years of credit on or after his 47th birthday (credited service), (b) his covered service (covered employment) ended prior to his 50th birthday, and (c) he demonstrated confusion as to the application of Plan rules to his circumstances by his reasonably contemporaneous application for benefits.

Miscellaneous Settlement Features

The previously summarized terms and conditions of the class action settlement are amplified by a number of additional features. All of the following provisions apply only to settlement-based pension payments, (the benefit amount that is based solely and entirely on the settlement):

Retroactivity The periods of settlement-based pension payments are retroactive as well as prospective, as if the settlement was in effect all along, rolling back the payment clock to the first date on which the participant (if the settlement had been in effect) could have begun to receive settlement-based Retirement Benefits.

Waiver of Late Filing The general limitation of 12 months of retroactive pension payments if a participant or other claimant fails to file his benefits claim in a timely fashion is waived for all settlement-based Retirement Benefits. The Plan will honor valid settlement-based claims until December 31, 2015, and will make full retroactive payments to the extent appropriate in the circumstances.

Payment for Periods of Non-Retirement The general provisions of the Plan which prohibit retirement pension payments during employment prior to retirement and during re-employment after retirement are inapplicable, insofar as retroactive settlement-based Retirement Benefits are concerned, if and to the extent an eligible participant demonstrates that such employment or reemployment was the result of a refusal or denial by the Plan to grant eligibility.

Interest on Retroactive Payments To the extent settlement-based pension payments are retroactive (i.e., are based upon a date prior to the actual payment), the Plan will also pay simple interest, from the retroactive date to the actual payment date, at a 6% annual interest rate (there is no interest accrual after February 15, 1988, on settlement claims received after that date).

Payments to Heirs and Estates Recognizing that many participants and survivors entitled to settlement-based pension payments would be deceased when the court-approved settlement was finalized (in late 1987), the settlement provides that “[a]ny payment which would have been made to a deceased claimant under the provisions hereof were it not for the claimant's death, shall be payable to the estate of such deceased claimant or to such of his heirs as may be determined by the Fund.” The Plan has established procedures to verify that settlement benefits based upon decedents' rights are distributed in accordance with last wills and state intestate property inheritance laws.