It’s been an interesting year for the stock market. In the spring, the COVID pandemic caused negative reactions in the markets. Towards the fall, the stock market had many ups and downs due to the presidential election.
The good news is that the merged fund in Indiana and Kentucky is still in the green zone and most of the losses taken in the spring were made up as the year went on. The problem is the time it takes to make up for losses, coupled with work slowdowns and stoppages, has left a lag in the recovery process for the rest of the councils’ pensions.
You may have heard a presentation done in your local union meetings about the great recession and the pension recovery process. The economy after 2009 was known as a “U” shaped recovery, meaning the market fell, stayed there a while, then began to recover around 2013.
Currently, the economy is in a “V” shaped recovery, meaning the markets fell as a result of COVID, then immediately started to recover.
The problem with today’s markets is that they are recovering on Wall Street but not on Main Street. Jobless rates are skyrocketing in the commercial business world, and with that comes an enormous lag in job creation. The recovery that started in 2013 was a combination of decent markets on Wall Street and job creation. Many of us have heard, “as the economy goes…so goes construction”.
The success of our pensions recovering revolves around what’s known as “growth”, meaning good markets, job creation, construction starts, and low unemployment. Also, as tax dollars are made by working people, states will put that money back into the economy with infrastructure projects, which puts money in Carpenter pockets, which causes us to spend, which puts money into the hands of business owners, which causes “growth”. This type of growth is what’s required for a much faster rate of pension recovery.
Before COVID 19, some of our pensions had knocked ten years off of their recovery. After the pandemic, those same pensions added seven or eight years back to their recovery. Keep in mind that most are still ahead of their initial recovery date from the 2009 recession.
Always remember that apprentices are not only the future of our trade but they are also the strength in our pensions. We need more people paying into the pension than receiving a pension. The retiree to active member ratio needs to be at least 1-to-1 for the pension to survive. Anything over that, meaning more actives than retired, ensures long term health to all of the benefits.
When you see an opportunity to help an apprentice find their way or an opportunity to add more members to your job site please take it, our future and your pension depend on it.
Learn more about IKORCC benefits here.