Over the last couple of weeks the Human Resources office has received many requests from Plan members for individual retirement projections. Unfortunately, given the number of members in the plan and our limited resources, it is not possible to accommodate these requests. To assist plan members in deciding whether to take their share of the $3 million surplus distribution in cash or as a benefit improvement here are some examples of the increase a plan member could expect at retirement for each $1,000 of pension income.

IT IS IMPORTANT TO BEAR IN MIND THAT THE BENEFIT IMPROVEMENT APPLIES TO BENEFITS EARNED PRIOR TO 2000. THE EXAMPLES ARE BASED ON A JANUARY 1, 2001 RETIREMENT. THE FURTHER IN THE FUTURE THE RETIREMENT, AND THE GREATER THE PROPORTION OF POST 1999 CREDITED SERVICE THE LESS OF A PENSION INCREASE WILL BE PROVIDED BY THE IMPROVEMENT.

EXAMPLES:

INCREASE IN MONTHLY PENSION PAYMENT IF NORMAL FORM OF PENSION IS CHANGED FROM LIFE 5 YEARS, TO LIFE 10 YEARS.

TABLE #1 - SINGLE PLAN MEMBER

Examples are based on someone retiring on January 1, 2001, with a $1,000 monthly pension.

#1 Column #1 represents the current normal form of pension under the plan.
#2 Column #2 represents an extension of the guarantee period from 5 years to 10 years. This option is available at retirement and it results in lower monthly pension than the normal form.
#3 Column #3 represents the proposed normal form of pension under the plan.
#4 Column #4 represents a conversion from the proposed 10 year guarantee to a 5 year guarantee, and it results in higher monthly pension than the normal form.

As you can see from the examples, if the normal form of pension is improved as proposed, a plan member may choose a pension with a five year guarantee and receive a higher benefit. In this way a plan member who has no spouse or children and is not concerned with leaving an estate, still receives a benefit from the proposed change.
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INCREASE IN MONTHLY PENSION PAYMENT IF NORMAL FORM OF PENSION IS CHANGED FROM LIFE 5 YEARS, TO LIFE 10 YEARS.

TABLE #2 - PLAN MEMBER WITH A SPOUSE WHO IS SAME AGE
Examples are based on someone retiring on January 1, 2001, with a $1,000 monthly pension.

#1 Column #1 represents the current normal form of pension under the plan.
#2 Column #2 represents a conversion from the normal form to a pension that is payable for the lifetime of the plan member and the plan member's spouse, reducing to 2/3 upon the death of the plan member or the plan member's spouse. This is called a Joint & Survivor option.
#3 Column #3 represents a conversion from the normal form to a pension that is payable with no reduction, for as long as the plan member or the plan member's spouse, are alive. This is also a Joint & Survivor option.
#4 Column #4 represents the proposed normal form of pension under the plan.
#5 Column #5 represents a conversion from the proposed normal form to a pension that is payable for the lifetime of the plan member and the spouse, reducing to 2/3 upon the death of the plan member or the plan member's spouse. This is called a Joint & Survivor option.
#6 Column #6 represents a conversion from the proposed normal form to a pension that is payable with no reduction, for as long as the plan member or the plan member's spouse, are alive. This is called a Joint & Survivor option.

As you can see from the examples, if the normal form of pension is improved as proposed, a plan member may choose a pension that is payable for the lifetime of the plan member and the plan member's spouse (Joint & Survivor pension) instead of the normal of pension with a 10 year guarantee, and receive a higher monthly pension than would be payable under the current terms of the plan.
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INCREASE IN MONTHLY PENSION PAYMENT IF NORMAL FORM OF PENSION IS CHANGED FROM LIFE 5 YEARS, TO LIFE 10 YEARS.

TABLE #3 - PLAN MEMBER WITH A SPOUSE WHO IS 5 YEARS YOUNGER
Examples are based on someone retiring on January 1, 2001, with a $1,000 monthly pension.
#1 Column #1 represents the current normal form of pension under the plan.
#2 Column #2 represents a conversion from the normal form to a pension that is payable for the lifetime of the plan member and the plan member's spouse, reducing to 2/3 upon the death of the plan member or the plan member's spouse. This is called a Joint & Survivor option.
#3 Column #3 represents a conversion from the normal form to a pension that is payable with no reduction, for as long as the plan member or the plan member's spouse, are alive. This is also a Joint & Survivor option.
#4 Column #4 represents the proposed normal form of pension under the plan.
#5 Column #5 represents a conversion from the proposed normal form to a pension that is payable for the lifetime of the plan member and the spouse, reducing to 2/3 upon the death of the plan member or the plan member's spouse. This is called a Joint & Survivor option.
#6 Column #6 represents a conversion from the proposed normal form to a pension that is payable with no reduction, for as long as the plan member or the plan member's spouse, are alive. This is called a Joint & Survivor option.

As you can see from the examples, if the normal form of pension is improved as proposed, a plan member may choose a pension that is payable for the lifetime of the plan member and the plan member's spouse (Joint & Survivor pension) instead of the normal of pension with a 10 year guarantee, and receive a higher monthly pension than would be payable under the current terms of the plan.