Pension > SPD > Normal Retirement

    

Normal Retirement

When Am I Eligible For a Normal Retirement Payment?

Assuming you remain in bargaining unit employment until age 65, you are eligible to retire with a normal retirement payment on the first day of the month in which you attain age 65, your normal retirement date, regardless of the number of your service credits. Service credits are defined here. However, if you were first hired and first became a Plan participant at age 65 or later, you will not become eligible to retire with a normal retirement payment until the fifth anniversary of the date of your initial participation in the Plan.

What Is the Amount of the Normal Retirement Payment?

The annual amount of your normal retirement payment depends on when you last worked in bargaining unit employment.

Please note that the provisions set forth below relate to the terms of the Plan as in effect in May, 2004. The Plan may be amended or terminated at any time, and future benefit accruals (if any) may be different from those that previously applied.

If you have at least one Hour of Service in bargaining unit employment on or after December 1, 2003, your retirement benefit (stated in the form of a single life annuity) will be determined as the sum of Part 1 and Part 2 of the following formula:

Plus

For example, if you commenced bargaining unit employment on January 1, 1984 and worked continuously on a full-time basis until your normal retirement date on December 31, 2005, effective as of that date you would have 20 Years of Future Service multiplied by the 2.03% accrual rate, plus 2 Years of Future Service multiplied by the 0.65% accrual rate, with your Final Average Pay calculation taking into account all Years of Future Service through December 31, 2005.

If you retired or terminated your bargaining unit employment prior to December 1, 2003, your retirement benefit will be determined in accordance with the terms and conditions contained in the Plan as of the date of your retirement or if earlier, your date of termination of bargaining unit employment.

The calculations above do not apply to inactive vested participants or to members of decertified groups. If you are in one of these groups, please ask the Fund Office about your benefit payments. The Plan provisions in effect at the date your bargaining unit employment terminated will usually (but not always) apply. The Plan provisions govern the applicable formula.

Your Final Average Pay is your yearly average Base Pay determined based on the highest 20 of the most recent 40 full calendar quarters immediately preceding your death or termination of bargaining unit employment.

Effective January 1, 1988, your Base Pay is the rate of base pay in effect for the job grade classification in which you are normally assigned on the first day of the calendar month.

Your Base Pay includes any amounts that you elect to be contributed as employee tax deferred contributions to the ABC Savings and Investment Plan. However, it does not include overtime pay, penalties, turnaround pay, night shift differential, overscale pay or any other form of extra compensation or pension plan contribution made on your behalf.

However, if you were hired before January 1, 1983, your retirement benefit (stated in the form of a single life annuity) will not be less than the benefit produced by the formula below, which depends on Base Pay.

1. 1.90% of your Base Pay for the Plan Year 1978 times your years of Past Service (see here, and Future Service through 1978, plus
   
   
2. 1.90% of your Base Pay during each Plan Year of Future Service after December 31, 1978 and prior to January 1, 2004 (see here), plus
   
   
3. 0.65% of your Base Pay during each Plan Year of Future Service after December 31, 2003 (see here).

Effective January 1, 1992, the maximum amount of service credit recognized by the Plan was increased to 40 years of Past and/or Future Service. Under this provision, if you accumulate credit for more than 40 years of Past and/or Future Service, the amount of your retirement payment will be based upon your last 40 years of service credit.

The following example illustrates the normal retirement payment calculation:

John became a regular employee of the Company on January 1, 1975 at age 38. His base pay for the 1978 Plan Year was $29,000 and his base pay from 1979 until his normal retirement date of January 1, 2005 is shown below.

John's final average pay (2000 - 2004) is equal to $57,400. At his normal retirement date, after 30 years of credited service, John's retirement payment would be the greater of (1) or (2) below.

1. (2.03% x 29 x $57,400) + (0.65% x 1 x $57,400) = $34,164.48 ($2,847.04 per month)
2. 1. John has 4 years of continuous employment as of December 31, 1978. Therefore, he has 4 years of Future Service credit, which results in an annual benefit of $2,204 (1.9% x $29,000 x 4 years).
      
      
   2. From January 1, 1979 to his normal retirement date, he earned 26 years of Future Service credit. The annual benefit earned each year is 1.9% x the Base Pay in effect for each year from 1979 through 2003, and 0.65% x the Base Pay in effect for 2004. The total annual benefit earned for this period under this portion of alternative method (2) is $20,865.50.
      
      
   3. The total benefit earned under alternative method (2) is $23,069.50: the sum of $2,204 and $20,865.50.

Therefore, John's annual normal retirement payment (stated in the form of a single life annuity) is determined based on method (1) in the amount of $34,164.48, which is the greater benefit produced under the two formulas:

1. $34,164.48
2. $23,069.50
   

John's benefit, if paid in the form of a single life annuity, would be payable in equal monthly installments of $2,847.04 for life ($34,164.48 divided by 12).

Note that the amount of your Base Pay that is counted for purposes of determining your benefits under the Plan may be limited by applicable law and the terms of the Plan.