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Year Ended Amount1
June 30, 1988 $2,474,363
June 30, 1989 797,211
June 30, 1990 243,086
Total $3,514,660
1These amounts have been rounded to the
nearest whole dollar. Also, because the VEBA
Trust reimbursed Provident for these
payments, there is a slight timing difference
resulting from these disbursements.
Petitioner commingled its $3,210,991 VEBA contribution for union
medical benefits with all other VEBA assets.
Long-Term Disability
Reserve Computation
William H. Mercer (Mercer) was an employee benefit
compensation and actuarial consulting firm. In 1986, petitioner
asked Terrence McManamon (McManamon), a principal with the
Cleveland office of Mercer, to perform calculations to quantify
the disabled life reserve for long-term disability coverage for
salaried and nonunion hourly employees. Using source information
from petitioner, McManamon was able to determine the net monthly
and annual benefits payable to petitioner’s then currently
disabled employees. McManamon then took into account offsets for
Social Security and workers’ compensation and offsets received by
any other employer-sponsored program or State disability
programs. McManamon’s calculations assumed that all currently
disabled employees included in the calculation would continue to
receive benefits until age 65. The calculation did not take into
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