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Once you know your specific plan’s Funding Percentage, your plan can be classified as one of the following:

OVERCAST: Some Pension Risk

THUNDERSTORMS: Considerable Pension Risk

Here are some notices you might receive if your plan is at considerable risk.

1. ERISA § 101(f) Notice. If your 101(f) shows your plan’s funding to be less than 60% but more than 45%, consider your plan at risk. Check your Notice carefully. It may contain additional information that could indicate its forecast should actually be for stormy weather ahead. Such information includes: (1) the ratio of plan assets to payments; (2) summary of rules governing insolvent MEPs; and (3) the limits of Pension Benefit Guarantee Corporation (PBGC) guarantees.

2. ERISA § 302(d)(12)(E) Notice. In certain industries known for troubled pension situations, including airlines and steel, employers have an option of making what is called an “alternative deficit reduction contribution” (“DRC”). Employers who elect to make such non-standard contributions are almost certainly having severe cash flow difficulties. An under funded plan may also be required to make contributions in addition to those required under the minimum funding standards. A DRC notice must be sent to plan participants within thirty days of filing for the election.

3. ERISA § 302(b)(7)(F) Notice. You will receive this notice if your MEP elects to defer charges for a net experience loss. Again, a plan is not likely to elect this relief unless it is in serious financial trouble.

4. Notice of Funding Waiver. You get a “Funding Waiver” notice when your plan applies to the Internal Revenue Service to be exempted from what are otherwise minimum funding standards. This may also be a warning sign that the plan sponsor is experiencing serious cash flow problems.

Additional information which may classify a plan as at considerable risk.

Actives versus Inactives . Question number 7 on Form 5500 ( www.freeERISA.com) allows you to determine your plan’s percentage of actives (participants working) to inactives (retirees). Your plan is at risk if it is both underfunded and has fewer actives to support those receiving benefits. Rate your plan’s future if the percentage of actives to inactives is less than 80%.

New Participants . Comparing question number 6 to number 7 on Form 5500 will tell you how many participants were added to your plan during the last reported year. A plan that is underfunded and not adding new participants is not healthy.

Sponsor Health . The basic guarantee of plan benefits is the economic strength and potential of the employer(s) obligated to fund the plan – the sponsor (in the case of a SEP) or the industry (in the case of a MEP). Numerous free investment services (for instance, SmithBarney) rate the financial health of both specific employers and industries. If such a service issues a “sell” recommendation (and not a hold or buy), for a SEP, or if the industry is in decline for a MEP, then your pension forecast is for THUNDERSTORMS.

HURRICANE: Imminent Pension Risk