DC 37 Annuity Fund Shows Strong Growth


Since its inception, the District Council 37 AFSCME Annuity Fund has grown annually by nearly 6 percent.

“The annuity is a painless and cost-effective way to save for retirement,” said Audrey Browne, the associate administrator and counsel at the DC 37 Health & Security Plan, which oversees the annuity.

The annuity was established in 1999 after DC 37 won the optional benefit in an economic agreement. Each DC 37 member from a local that opted to participate received a $522 one-time contribution from the city for the annuity. The $522 in seed money for individual accounts has grown to $1,467 since 1999. The annual interest rate of the fund is at a healthy 5.99 percent.

In July, investors in U.S. Treasury notes and bonds could count on a 1.99 percent in earnings over 10 years, according to the website of the financial services company Edward P. Jones & Co., L.P.

The rate for an AAA-rated municipal bond ranged from 0.39 to 3.87 percent. The annual interest rate for an insured bank deposit of less than $250,000 was 0.05 percent, and an investment of $1,000 in a 10-year money market fund earn $2.65 percent.

Under the economic agreement, local unions may opt to create a recurring annuity with a daily payroll deduction.

The individual accounts of the DC 37 locals with recurring annuities have accumulated far more earnings than the accounts based solely on the 1999 lump sum.

For instance, members of Sewage Treatment Workers and Sr. STPs Local 1320 contribute $3.76 a day to their recurring annuity. A Local 1320 member investing in the fund since its inception in 1999 will receive about $25,000 if they retire this year.

“It’s a good percentage,” said Local 1320 President Jim Tucciarelli, referring to the investment gain. “You are not going to get that with a bank, CD or money market.”

Dept. of Education Employees Local 372 is the latest local to establish a recurring annuity. The Local 372 Bargaining Committee voted in July to establish the annuity.

The money for the individual accounts of Local 372 members comes from the 2010-17 economic agreement’s Additional Compensation Fund, which provides bargaining units with a sum worth 0.52 percent of payroll for items such as annuity funds, longevities and payroll payments.

“The investment money will do a lot for our members,” Local 372 President Shaun D. Francois I said. “The amount that long-time members will receive when they retire should be pretty substantial.”

Amalgamated Bank manages the fund, which has market value of $108.37 million and 56,443 participants. The union negotiated a low annual management fee — $125 for each account — with the bank.

“I always like to encourage locals that only made the $522 investment to consider a recurring annuity,” Tucciarelli said. “The $3.76 daily contribution isn’t a big burden. It’s like emptying the change from your pocket at the end of the day.”

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