Wednesday, May 12, 2021

Frequently Asked Pension Questions

Q. What kind of Pension Plan do the Carpenters have?

It is a Defined Benefit Pension Plan, which will pay a monthly pension benefit. This benefit will be paid every month for the rest of your life. At the time when you retire, you will have the option of five different pension plans. The normal form of retirement for an unmarried participant is called a single life benefit. The normal form of benefit if you are married, is a 50% Joint & Survivor benefit. The other three forms are the optional 75% or 100% Joint and Survivor Benefit and the Life-Ten Year Certain Benefit.

When you die, your spouse will receive 50%, 75% or 100% of your monthly pension benefit for the rest of their life. This is called a Joint and Survivor option. You may also elect an the 10 year certain pension that will provide a fixed monthly benefit for the rest of your life, and guaranteed for at least 10 years. If you should die within that 10-year period, your spouse will receive the monthly benefit for the balance of that time. If you are single, or married and provide your spouse's written consent, you may elect what is called a single life benefit which pays the full accrued monthly benefit to you, but with no benefits whatsoever payable to any surviving beneficiary.

The option you select when you retire will affect the amount of the monthly benefit you will receive. In addition, when you make this election, it can never be changed, even if you should divorce and remarry.

Q. When would I be able to retire?

There are different requirements depending on your age and number of credited years. The normal retirement age is 65 with at least 5 years of service. You may retire with a reduced pension at age 55 with 10 years of service. This is called an early retirement pension, and your monthly benefit will be reduced by 6.67% per year from age 62.

There is an unreduced early retirement option at 62 if you have at least 3 years of credited service.

You may also retire with a full pension if your years of credited service, plus your age equals 80. This is called the 80 points rule, or Index 80.

It's also important to understand the vesting schedule. It takes 7 years to become 100% vested in the Carpenters Pension Plan. You will loose 20% per year if you elect to retire before you are 100% vested.

Q. How is my Monthly Pension Benefit Calculated?

Your normal benefit is 3% of the total credited employer contributions received on your behalf as a result of the work performed by you. Now take a look at an example: Let's say that you have had $ 100,000 of credited employer pension contributions paid in for you while you worked under the jurisdiction of the Union. Your monthly pension benefit would be $100,000 multiplied by 3% or $3,000 per month for the rest of your life.

Q. Does this pension plan have other benefits?

Yes. There is a Death benefit paid to eligible beneficiaries if you are vested in the Plan. The amount of the benefit is based upon the total employer contributions made on your behalf and your age at the time of death. There is a formula that an actuary will use, to determine the amount of your benefit based on these factors.

If you are married and are vested in the Plan, your surviving spouse will have options at the time of your death. They may elect a lump sum payment calculated based upon the total employer contributions and your age at the time of death. Or they may elect to receive the amount that would be paid as a 100% Joint and Survivor benefit, which will be paid monthly for the rest of your spouse's life. The monthly benefit would begin at the earliest time you could have retired.

There are also death benefits available if you die before you are vested. The amount of the benefit would be the total employer contributions up to a maximum of $1,000.

Additionally, there is a Disability Pension Benefit if you become disabled while you are an Active participant and you have 7 credited years of service.

Q. What happens if I separate from employment in the trade after becoming vested?
A. If you are vested when you separate, you remain vested. However, you may not be eligible to receive the disability benefit.