United Welfare Fund, Benefits

UNITED WELFARE FUND–SECURITY DIVISION UPDATE

The United Welfare Fund-Security Division is a unique benefit that is only available to members of the USWU and its affiliates. Many of you have been participating in the Security Division for many years but may not have a solid understanding of what the fund is and how it works. What is most important about the fund is the manner in which we handle our investments. The Security Division has in excess of $347 million in assets and pays benefits of more than $34 million annually. With such a large fund, wise investment is absolutely critical.

The Security Division’s investment philosophy is to maintain the highest quality of investments it can, by investing in fixed income securities. These investments include U.S. Treasury securities and Ginnie Mae mortgage-backed securities that are 100% guaranteed by the full faith and credit of the U.S Government, which makes them the safest vehicles in which to invest. By contrast, bank accounts and CDs are not backed by the US Government, and are only backed by the FDIC—and there are limits to the insurance the FDIC provides.

The Security Division adheres to a long-term investment approach that is meant to provide steady growth over the course of participants’ careers and give them peace of mind knowing that their account balances are stable and secure. It is the Trustees’ and my belief that our greatest responsibility to our participants is to protect their account balances and not put them at risk by subjecting them to the volatility and daily fluctuations of the markets or other investment vehicles.

We have intentionally avoided riskier investment options such as the stock market. When the stock market plummeted in 2008, the participants in the Security Division were all thanking the Trustees for investing in US Government Securities.

We did a fifteen (15) year study comparing the Dow Jones averages compared to the Security Division dividends: Dow Jones was 4.8% compared to the non-risk taking Security Division of 5.58%. 

Many other union-sponsored ERISA Funds have not been as cautious and are now paying dearly for their poor choices. If you follow the news, you will hear regularly of union-sponsored benefit funds cutting benefits anywhere from 25% to 50% because of risky investments gone bad in recent years. We are proud to say we continue to provide positive dividends. 

No one can predict the future, but we all know from past history that interest rates fluctuate over time. We also know that interest rates will begin to rise again soon. Your Security Division dividends rise and fall with interest rates. Today, with artificially lower interest rates, the dividends have been lower. We hope that in the December meeting of the Federal Reserve, they will raise the interest rate, which will thereby have a positive effect on future Security Division dividends.

As always, we will continue to invest in safe investments so that we can guarantee that your Security Division balance is there for you when you retire.