Within the past few days, many ARC retirees have received letters describing changes in the way that their pension benefit will be paid beginning September 30. The American Red Cross Retiree Association board has been briefed on these changes and has made plans to help our members and other retirees understand these changes beginning with this initial communication.
If you will be affected, it is most important to note that the American Red Cross has pledged that “there will be no changes to the gross amount or timing of your monthly pension payment.” If you do not receive a letter from the Red Cross, your benefit will continue to be paid in the same way.
It is also important that you read the materials carefully, respond to any requests, and make use of the phone numbers and email addresses provided as needed. If you get help from a family member or other advisor with your financial business, get the materials in front of them promptly.
- The Red Cross has purchased a new group annuity contract from Athene Annuity and Life Company to honor obligations to pension recipients whose monthly gross payments from the Retirement System portion of your benefit are $500 or less and who began receiving benefits on or before July 1, 2016.
- In addition, pension recipients whose benefit has been partially backed by Aetna and John Hancock annuities purchased in 1989 will begin receiving two direct deposits or checks each month, one from Athene and one from either Aetna, John Hancock, or from the State Street Bank on behalf of the Red Cross Retirement System. Alight Solutions (formerly Aon Hewitt) will continue to support administration of Red Cross benefits.
- Red Cross pension benefits are currently insured by the Pension Benefit Guaranty Corporation (PBGC). Going forward, the portion of your benefit paid by the annuity contracts will be backed by State Guarantee Associations. We will provide more info on State Guarantee Associations in future communications.
We’d urge benefit recipients to note:
- Though the timing of when your monthly pension benefit is issued will not change, if you will be receiving two payments which add up to your current benefit, it is possible that your direct deposits will not be posted on the exact same day; however in most cases it should. Likewise, your checks may not arrive in the mail on the exact same day. If you become concerned after receiving the first direct deposit or check, we’d urge you to wait a day or so before calling the appropriate support number.
- We suspect that many pension recipients are unaware that benefits earned prior to 1989 have been covered by John Hancock or Aetna annuities though they have been combined with benefits earned after 1989 and paid through the State Street Bank in a single check or direct deposit. Though your gross total benefit may be greater than $500 per month, the portion actually coming from the Retirement System may be less than this if any portion of your total benefit has been covered by these 1989 annuities. If you fall into this category, your total pension benefit will now come directly from Athene and John Hancock or Aetna.
Why the Changes?
As indicated in the letters, Red Cross has concluded that purchasing the new annuity contract and changing the way in which the existing annuity contracts pay other pension recipients is the best way to secure pension benefits for current recipients, maintain a healthy plan for future retirees, and focus financial resources on the mission.
Insurance company annuities are common and typically sound, but as with any major financial institution, there are always pros and cons to be found. In our preliminary research, however, we have found that insurance companies which hold the pension obligations for organizations like the ARC have excellent track records. For example, although many may be unaware, retirees who have been receiving pension benefits and were employed in 1989 or earlier are receiving a portion of their benefit from John Hancock or Aetna, paid through the ARC.
- If you have questions after reviewing the Athene Welcome Packet, call them at 1-877-8134240.
- Direct questions regarding the portion of your benefit that will now come directly from:
- John Hancock: 1-800-624-5155.
- Direct calls to Alight (formerly Aon Hewitt): 1-877-860-7526 regarding the portion of your benefit still being paid by the Red Cross Pension Plan through the State Street Bank. Alight will also continue to provide customer support for the Red Cross Savings Plan 401(k), retiree health insurance and other benefits.
- If, after making these calls, you have questions or concerns, contact ARCRA at 1-888-738-2724 or ARCRA@redcross.org. We’ll help you navigate the basics of the changes and help you get your questions to the right place. (We’ll make every effort to respond within 24 hours.)
ARCRA Support Going Forward
Regardless of the source of your pension benefit, ARCRA will continue to advocate for all Red Cross retirees and educate our members on important and relevant issues. Given the impending changes, our research and education efforts will now include pensions backed by annuity contracts and the State Guaranty Associations which insure them and be communicated through our monthly eNewsletters, print newsletter The Retiree, and website. In addition, we’ll continue to help retirees to stay connected. Our ability to continue this work depends on the continued support of our members.