Frequently Asked Questions

Local Unions Supplemental Pension & Severance Trust Fund

Introduction

In the early 1970s, many CWA locals in the country took steps to provide members with a way to supplement their company pension by providing a savings plan to help insure their members a brighter future.

Many years of work have gone into the Local Unions Savings Plan to make the most secure savings and retirement plan available. Thousands of CWA members studied the plan, recognized its superiority and are now enrolled and saving.

Nationwide Life Insurance Company, one of the largest insurance organizations in the United States, was selected by the locals to administer the plan and provide backing for all savings.

The Executive Committee strongly urges you to study the program and make a commitment to yourself and the future.

Local Unions Supplemental Pension & Severance Fund Trust, Plan Administrator, Communication Workers of America.

Address:
LUSP Trust
35 Bardonia Road
Bardonia, NY 10954
Phone: 845-735-1818

What is it?

It’s a Retirement Plan…

The power behind a retirement plan lies not just in the money with which it is funded, but in the way the money is invested. Investment superiority has made Nationwide Life Insurance Company a leader in the pension funding field and is one of the many reasons why pension planners in all types of businesses choose Nationwide professionals to design, implement and manage their retirement programs.

It’s a Savings Plan…

Recognizing the fact that there are many compelling reasons to save long term for events in our lives, LUSP provides a safe and guaranteed vehicle to plan for them. Whether buying a home, planning a college education or retirement, it is now possible to save for these and other reasons, tax deferred. LUSP permits limited withdrawals from your savings without penalties assessed by the Trust. Taxes will have to be paid on the portion of the distribution that is deemed to be earnings. A 10% excise tax imposed by IRS on early withdrawals (on the earnings only) may also be owed.

Nationwide guarantees your contribution and the earnings on them. You will not be subject to the wide market fluctuations of the stock market because the guarantee minimum interest is announced each year. This makes it easier to plan with a degree of certainty for future events.

It’s not a mutual fund…

What is a mutual fund? It is a company that takes money from investors and issues them shares in their fund in exchange. The daily value of this fund varies because the underlying stocks and bonds in the fund vary in value from day to day.

The contributions of LUSP participants are not invested in mutual funds, which can vary in value from day to day depending on market conditions. Nationwide invests the assets of the Trust in a wide variety of fixed income securities such as mortgages, government securities and high‑grade corporate bonds and similar securities. Nationwide does not consider “junk bonds” for investment purposes in the Trust. Because Nationwide underwrites the principal and interest guarantee, your account value is stable and secure and it is unaffected by market downturns.

About your plan….

1) How much may I contribute?

You may save as much as you wish. You may open your individual account by saving as little as $7.00 per week or as much as you like (in multiples of $7.00). For example, $14.00, $21.00 or $28.00 and up can be saved on a regular basis. You may also contribute money to your account in single payment lump sums ($500 minimum) as often as you wish, even after you retire.

2) How do I make my contributions?

Your after‑tax savings contributions can be made by convenient payroll deduction. Whatever amount you choose to save will be withheld automatically from each paycheck. If your company does not offer payroll deduction, it may be possible for you to make other arrangements. To start payroll deductions, or to discuss other arrangements, call the Plan Administrator at 845-735-1818.

3) How do I change the amount that I’m contributing?

You may increase, decrease or temporarily suspend your payroll deductions if necessary by contacting the Plan Administrator to obtain the appropriate form. There is a cut-off date each month for changes effecting the following month’s payroll deductions.

4) If I save $21.00 each week, how much could I accumulate?

Based on illustrative annual interest guarantees of 7.5% and 8.5%, the two charts below estimate how your account could grow.

Illustration

7.5% Years Total Deposits Accumulated Value Including Interest 8.5% Total Deposits Accumulated Value
Including Interest
$5,460 $6,582 $ 5,460 $ 6,747
$10,920 $16,032 $ 10,920 $ 16,892
$16,380 $29,598 $ 16,380 $ 32,147
$21,840 $49,075 $ 21,840 $ 55,086
$27,300 $77,035 $ 27,300 $ 89,577
$32,760 $117,177 $ 32,760 $ 141,440
$38,220 $174,805 $ 38,220 $ 219,424
[These rates are for illustrative purposes only. For the current interest rate, contact the Plan Administrator.]

5) What rate of interest will my money earn?

Your contributions to the Plan will earn a minimum rate of interest which is negotiated annually. The actual rate of interest paid on your savings may be higher than the minimum rate that is guaranteed, depending on the investment experience of the fund. But, it will never be lower.
6) What about taxes on my interest earnings?

Your interest earnings are not currently taxable. They are tax‑deferred.

Unlike interest earned in a savings account from a bank or savings and loan, the interest you earn in your local union’s Plan is not reportable or taxable until you retire or withdraw your money. Instead of paying some of the interest to the government each year in the form of taxes, it stays in your account working for you!

7) What happens to my money after my payroll deductions have been made?

Your payroll deductions are sent directly to the Plan’s custodial bank. The custodial bank transmits your money to Nationwide Life Insurance Company who has the responsibility to manage and invest your money on your behalf.

8.) If this is a savings and retirement program, why are my payroll deductions sent to an insurance company?

Insurance companies manage over half the retirement plans of corporations and businesses in the United States. Your Plan chose Nationwide Life Insurance Company because of its recognized excellence in the field.

Established in 1929, Nationwide now ranks among the twenty largest stock like insurance companies in the nation with over $45 billion in assets.

9) Will I receive information about the progress of my account?

Once payroll deductions have begun, Nationwide will furnish a statement each quarter showing the current value of your account. You may request an additional statement by contacting the Plan Administrator.

10) Can I make contributions to my account over and above the amount of my payroll deductions?

Yes, you can make additional contributions as an actively employed CWA member or after you retire.

Additional lump sum contributions may be made directly to Nationwide Life by personal check or money order. Such deposits (must be $500 or more). Forms and instructions are available from the Plan Administrator.

11) What happens to my money if I die?

Your designated beneficiary can do one of the the following:

Withdraw the account in a lump sum, choose a monthly annuity option to suit his/her needs, or leave the money in the Plan, changing the name on the account to his/her name.

12) How do I designate a beneficiary or change my beneficiary?

You can name or change your beneficiary by contacting the Plan Administrator who will provide you with the proper form to complete.

If your spouse is named as your beneficiary, you cannot change your beneficiary with out your spouse’s written consent.

13) What are my options if I terminate employment, am no longer an active CWA member, or decide to withdraw my savings?

Complete flexibility! When one of the above happens, you have several options:

a) You may withdraw all or part of your money at any time. However, unlike most retirement plans, you are never required to begin taking your money out. You may leave your money in the trust for as long you like, even after you reach age 70 1/2.  It will continue to grow at the same rate of interest being paid by active participants. If you wish to take a partial distribution of your account, you may do so once in any 12‑month period. You may take up to 60% of the accumulated balance at the time of withdrawal. b) You may select from a wide range of annuity (guaranteed monthly income) options, or

c) Any weekly contributions and lump sum contributions you previously made will continue to earn the rate of interest which is payable to the fund that year. You may also make additional lump sum contributions with a minimum of $500 per contribution.

Most savings and retirement plans penalize their participants for making early withdrawals by decreasing their interest rate. This is not so with your plan!

You may withdraw the full value of your account at any time without loss of interest. There will be only a small handling charge to cover the cost of processing your withdrawal.

Upon withdrawal, all earnings on after‑tax contributions may be subjected to a 10% excise penalty. Please consult with your tax adviser prior to withdrawal.

14) If I decide to withdraw my money in guaranteed monthly lifetime payments, how much income can I expect to receive each month?

This depends on your age and account balance at the time you wish your payments to begin. For example, if you had $21.00 payroll deducted each week, and these deductions accumulate at an annual interest rate of 8.00% for 25 years, your account balance after 25 years would be $83,045.

If you then purchased a life annuity, the amount you would receive each month for the rest of your life would be approximately:

Age when payment begins Estimated monthly benefit

55                                            $462.56

60                                            $499.10

65                                            $548.93

15) How do I notify Nationwide of my intent to withdraw my money or receive a monthly income?

Contact the Plan Administrator for the proper form to complete. Withdrawal payments are processed as received by Nationwide, so you should receive payment in about three weeks.

Please keep us informed of any change of address so that we can keep our records current.

Let’s review some of the unique features of your Plan…

Convenience:  Savings by payroll deduction – the easiest way for you to save.

Competitive Return:  The current interest rate is generally higher than that which can be earned through banks and similar institutions.

Safety: Your principal is backed by Nationwide Life Insurance Company, a proven leader in administering savings and retirement plans. Nationwide administers over $40 billion in long‑term savings assets.

Tax Advantages: Your interest earnings are not currently taxable. The money you would have paid in taxes keeps working for you.

Flexibility: Your payroll deductions can be as much as you want and can be increased, reduced or stopped at any time without an interest penalty.  You are not committed, except to yourself!