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SOUND RETIREMENT | 22

Example: Modified Reduced Early Retirement Pension Benefit
Jim’s effective date of coverage is October 1, 1993, he has 20 years of credited
future service, a regular pension benefit of $750 per month (payable at age
65 as a single life annuity), and he worked an average of 1,800 hours per year
through the Plan Year ending September 30, 2013. He has no credited past
service but has a break in service in the 2013/2014 Plan Year followed by 3
Plan Years in which he worked 1,000 hours and earned an additional $75 per
month when he elects to retire on October 1, 2017, at age 58. Jim’s employer
is subject to the 2016 Rehabilitation Plan when he retires.
Because Jim’s employer is subject to the 2016 Rehabilitation Plan (see page
18) and Jim has not completed enough service following his 2013/2014 Plan
Year break in service, he is not eligible for a standard reduced pension benefit
on benefits earned prior to the break in service but is eligible for a standard
reduced pension on the amounts earned after his break in service. The portion
of Jim’s monthly benefit earned prior to his break in service will be adjusted as
follows:

For a Modified
Jim’s early retirement reduction is Reduced early
For ages…
calculated as… retirement
reduction of…

60 to 65 60 months x 2/3 of 1% per month 40%

58 to 60 24 months x 5/12 of 1% per month 10%

Jim’s Modified Reduced early retirement 50%
reduction at age 58 =

The portion of Jim’s monthly benefit earned after his return to employment
following his break in service will be adjusted as follows:

For a Standard
Jim’s early retirement reduction is Reduced early
For ages…
calculated as… retirement
reduction of…

60 to 63 36 months x 1/2 of 1% per month 18%

58 to 60 24 months x 1/3 of 1% per month 8%
Jim’s Standard Reduced early 26%
retirement reduction at age 58 =

After adding together Jim’s reduction percentages based on his age at
retirement, then subtracting from 100%, Jim is eligible for a modified
reduced early retirement pension equal to 50% (100% − 50%) of his regular
pension amount earned prior to his break in service. He will therefore
receive $375 per month ($750 x 50%), payable as a single life annuity for
that portion. After adding together Jim’s reduction percentages based
on his age at retirement, then subtracting from 100%, Jim is eligible for a
standard reduced early retirement pension equal to 74% (100% − 26%) of
his regular pension amount earned following his break in service. He will
therefore receive $55.50 per month ($75 x 74%), payable as a single life
annuity for this portion. Jim’s total early retirement benefit payable as a
single life annuity is $430.50 per month ($375.00 + $55.50). If Jim selects a
different form of payment (for example, if he is married and selects the 50%
spouse pension), this monthly amount will be further reduced.