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 13 YEARS.
TABLE #1 - 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.
| Age of Plan Member | Age of Spouse | #1 Normal Form Life 5 | #2 Joint & Surv. 2/3 | #3 Joint & Surv. no red. | #4 Normal Form Life 13 | #5 Joint and Surv. 2/3 | #6 Joint & Surv. no red. |
| 55 | 55 | $1,000.00 | $949.30 | $885.50 | $1,000.00 | $971.65 | $906.34 |
| 60 | 60 | $1,000.00 | $939.30 | $862.30 | $1,000.00 | $978.75 | $898.52 |
| 65 | 65 | $1,000.00 | $929.70 | $837.40 | $1,000.00 | $1,000.00 | $902.86 |
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 13 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 13 YEARS.
TABLE #2 - 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.
| Age of Member | Age of Spouse | #1 Normal Form Life 5 | #2 Joint & Surv. 2/3 | #3 Joint & Surv. no red. | #4 Normal Form Life 13 | #5 Joint & Surv. 2/3 | #6 Joint & Surv. no red. |
| 55 | 50 | $1,000.00 | $920.70 | $860.80 | $1,000.00 | $942.37 | $881.06 |
| 60 | 55 | $1,000.00 | $901.70 | $829.90 | $1,000.00 | $939.56 | $864.75 |
| 65 | 60 | $1,000.00 | $880.60 | $795.30 | $1,000.00 | $949.44 | $857.47 |
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.