NEAP Life Stage Funds

NEAP's investment program consists of five, prudently invested portfolios customized for each age group: the Under 30s, 30s, 40s, 50s, and 60s and older.

Our youngest participants will have a portfolio more focused on growth, while the older participants will have a portfolio geared more toward the preservation of assets. We call each of these separate portfolios a “Life Stage Fund.”

Before we describe the NEAP Life Stage Funds, let’s go over a few investment basics. NEAP has never put all of its investment eggs into one basket. We have always included a mix of investment types — stocks, bonds, real estate and cash — to “diversify” your investments.

What comprises NEAP’s overall investment mix?

• Stable Value Assets are fixed income investments that have very little fluctuation in value over time. This is because their value is protected by contracts with banks and insurance companies.

   

• Bonds are IOUs, or debt, issued by companies or by governments. By buying a bond, the Plan is loaning money on which it will receive “interest” until the money is repaid to the Plan. The value of bonds fluctuates depending mostly on whether interest rates increase or decrease.

   

• Real Estate is a stable investment type that historically not only makes money for participants, but also provides a hedge against inflation. Our real estate investments offer an added bonus by creating union jobs for both IBEW and NECA members.

   

• Stocks are shares of ownership in companies. Stock investments share in any company profits in the form of both cash dividends and any increases in stock prices. Stocks are classified by size. Large caps are large corporations, mid caps are mid-size companies, and small caps are smaller businesses. In general, large cap stocks are more stable and provide steady growth, while small cap stocks are more volatile but have the greatest potential for growth. The new Life Stage Funds will continue to be prudently diversified in different investment types. What’s changing is that the investment mix in each fund will be tailored to better serve the needs of each specific age group.

Each Life Stage Fund is designed and managed by investment professionals who are fully focused on obtaining the best value and investment returns for NEAP participants. These professionals will act as “watch dogs” for your account — closely monitoring the market to determine how well your fund is performing. They’ll continually evaluate and adjust the asset mix of each Life Stage Fund as needed, with the goal of prudently maximizing your retirement assets. As you age, your investments will automatically move to the next Life Stage Fund — with no action required from you.

Life Stage Fund – Under 30s
The Under 30s Life Stage Fund is the most aggressive NEAP investment portfolio. It has a higher portion of stock investments than the other funds. As a younger participant, you most likely will not retire for another 40 years. This means you can be a more aggressive investor since you have more time to recover when the market hits a soft period. On the upside, the rewards of more aggressive investing can be significant. To keep a balance in your Under 30s Life Stage Fund, about 30 percent of your fund is composed of bonds and real estate, which are generally more stable investments and help balance the volatility associated with stock investments.

Life Stage Fund – 30s
While the 30s Life Stage Fund offers a more conservative investment mix than that of the Under 30s Life Stage Fund, it still provides excellent growth opportunities for participants who have at least 30 years until they retire. More than half of this fund is invested in stocks. The remaining balance of the fund is invested in bonds and real estate, which generally offer more consistent and predictable returns.

Life Stage Fund – 40s
The 40s Life Stage Fund is designed to offer both stability and growth. While about half of the fund is invested in stocks, most of those investments are in large cap stocks, which are considered more stable. This fund also includes investments in bonds and in real estate to help balance the fund’s stock investments.

Life Stage Fund – 50s
The 50s Life Stage Fund is geared toward participants who are nearing retirement, but have another 10 years or so to work. About half of the investments in this fund are in stable value assets, which offer a very stable rate of return. Roughly 50 percent is invested in mostly large cap stocks and real estate — historically, an investment that has offered both predictable results and stable growth.

Life Stage Fund – 60s +
The 60s Life Stage Fund is the most conservative of the NEAP investment portfolios. This fund, geared for members in their 60s or older, has a higher allocation of stable value assets along with some investment in large cap stocks and real estate. At this stage of your life, it’s important to protect the money you’ve invested and earned through the years, while it continues to grow. The 60s Life Stage Fund will help ensure that your money’s there when you need it.

Change to NEAP Plan of Benefits Concerning Disability Definition

Please be advised that the Trustees of the National Electrical Annuity Plan have amended the Plan of Benefits for NEAP effective January 1, 2005. This amendment expands the definition of Disability under the Plan and will affect all disability applications approved on or after January 1, 2005.

Currently, Section 8.1 of the Plan of Benefits for NEAP requires in part, that to be eligible for a Disability Benefit, a participant must be “totally disabled”. The Plan further requires that “proof of such disability must be filed with NEAP and shall consist of a Social Security Disability Award or such other proof as the Trustees may require”.

The Plan will continue to provide that a participant will be eligible for a Disability Benefit if he or she has a Disability Award from the Social Security Administration showing that he or she is currently receiving Social Security Disability Benefits. The Plan has been amended, however, to broaden the definition of Disability.

Under the amended Plan, if the participant is not receiving a Disability Benefit from the Social Security Administration, he or she may still qualify for a Disability Benefit if a bodily injury, sickness or disease prevents the participant from engaging in their job classification in NEAP Covered Employment. NEAP’s Trustees will require other medical proof to determine if a participant is eligible for a Disability Benefit.

This amendment was adopted to permit participants to have greater access to their individual accounts in the event of disability. Unfortunately, the NEBF Trustees were unable to make a similar modification to the NEBF Plan. The NEBF will continue to apply the Social Security standard for disability.