RS Plan Trust Contributions Transitioning to 12-Month Billing

Beginning with the May 2020 invoices, NRECA is switching from an eight-month to a 12-month billing schedule for the trust contribution portion of Retirement Security (RS) Plan invoices.

The accelerated eight-month billing schedule was originally put in place in 2011 to accomplish two things:

1. Avoid the occurrence of special increased funding requirements.
2. Reduce the amount of premiums the RS Plan is required to pay to the Pension Benefit Guaranty Corp. (PBGC), which vary based on the RS Plan’s funding level.

Legislation passed in 2014 resolved the concerns about special increased funding requirements and the passage of the SECURE Act of 2019 reduced the RS Plan’s PBGC contributions. As a result, NRECA began planning for a return to the 12-month billing cycle, beginning in January 2021. However, in light of the current situation and given the opportunity to further reduce the economic burden on our participating members, NRECA will revert to a 12-month billing cycle beginning with the May 2020 invoices. These invoices will be issued the week of April 20.

Because January through April 2020 RS Plan contributions were already made at the higher (8-month compressed) rate, the new monthly trust contribution rate for the remaining months of 2020 (May through December) should be roughly half of what a participating co-op would have otherwise paid between May and August under the existing 8-month billing schedule. In total, each participating co-op will still make the same level of total required contributions to the RS Plan for 2020, but that amount is now smoothed over the remaining months of 2020. Co-ops will benefit from a lower expense during these challenging next few months.

As done in prior years, NRECA will conduct a true-up, which will factor in this change. The projection will be included with the October, November and December invoices. The final true-up calculation for 2020 will be included in the March 2021 RS Plan invoice.

The change will not affect the administrative or employee contribution rates that are reflected in a co-op’s RS Plan invoice. In 2021, a normal monthly trust contribution will appear on each monthly invoice (1/12th of the annual contribution, which currently occurs for the administrative and employee contribution portion of the invoices).

If you have questions about this change, please contact your co-op’s field representative.