Individual Account Pension Plan > SPD > Pension Enhancement Option

Summary Plan Description

Pension Enhancement Option

If you retire on or after January 1, 2001, you can use all or a portion of your account balance (but not less than $10,000) in this plan to increase your monthly benefit under the Carpenters Retirement Plan of Western Washington. This plan feature is commonly referred to as a “cash fund annuity” with the Carpenters Retirement Plan as the annuity. The pension enhancement option provides you with several important financial advantages:

  • The same actuarial assumptions (investment, retirement and mortality) used to calculate your monthly benefit under the Carpenters Retirement Plan will be used to calculate the pension enhancement from your Carpenters Individual Account Pension Plan.
  • Your pension enhancement provides you and your spouse or other designated beneficiary (if applicable) with a lifetime monthly benefit from the Carpenters Retirement Plan. The enhancement is added to the monthly benefit already earned under the Carpenters Retirement Plan. As with the monthly income provided by the Carpenters Retirement Plan, you cannot outlive the income provided from the enhancement. In addition, the enhancement does not experience fluctuations in investment earnings or losses as does the monthly income available from the Carpenters Individual Account Pension Plan.
  • The amount used to generate the enhancement to your monthly benefit is guaranteed. If you die before the enhancement amount is distributed, any remaining balance is paid to your beneficiary.
  • The enhancement provides you with a lifetime monthly benefit without the purchase and processing fees associated with the purchase of a commercial annuity or other investment incomes.
  • If you die before all benefits are paid, your beneficiary receives the balance of this benefit.

The following examples illustrate how the pension enhancement option works.

Calculations
You retire at age 62 with a single life benefit of $2,000.00 under the Carpenters Retirement Plan. You elect to use a portion of your Carpenters Individual Account Pension Plan to increase your $2,000.00 monthly benefit under the other plan. The following three examples illustrate how this can be done. The annuity conversion factors are listed in Table 3.
Example 1

You use $10,000.00 (the minimum amount) to increase your $2,000.00 monthly benefit under the Carpenters Retirement Plan:

$10,000.00  ÷  Annuity Conversion Factor  =  Pension Enhancement Amount

$10,000.00  ÷  126.4856  =  $79.06

$2,000.00  +  $79.06  =  $2,079.06

In this example, $10,000.00 from the Carpenters Individual Account Pension Plan adds $79.06 to your $2,000.00 monthly benefit paid under the Carpenters Retirement Plan. The annuity conversion factor used to calculate the enhancement is age related so this portion of your monthly benefit is not subject to any early retirement reduction (if applicable). The enhancement amount is, however, subject to any joint and survivor reduction (also if applicable).

Example 2

You use $50,000.00 to increase your $2,000.00 monthly benefit under the Carpenters Retirement Plan:

$50,000.00  ÷  Annuity Conversion Factor  =  Pension Enhancement Amount

$50,000.00  ÷  126.4856  =  $395.30

$2,000.00  +  $395.30  =  $2,395.30

In this example, $50,000.00 from the Carpenters Individual Account Pension Plan adds $395.30 to your $2,000.00 monthly benefit under the Carpenters Retirement Plan. This amount is subject to the joint and survivor reduction (if applicable).

Example 3

You would like to increase your $2,000.00 monthly benefit under the Carpenters Retirement Plan by exactly $300.00:

Pension Enhancement Amount  x  Annuity Conversion Factor  =  Required Enhancement Amount

$300.00  x  126.4856  =  $37,945.68

In this example, a $300.00 increase to your $2,000.00 Carpenters Retirement Plan monthly benefit requires $37,945.68 from your Carpenters Individual Account Pension Plan. This amount is subject to the joint and survivor reduction (if applicable).

For additional information about the pension enhancement option, please see Article 10.6.

Table 3
Pension Enhancement Option – Annuity Conversion Factors
The annuity conversion factors determine the single life benefit provided by the pension enhancement option. First, determine the amount from your Carpenters Individual Account Pension Plan you wish to enhance your Carpenters Retirement Plan monthly benefit with. There is a $10,000 minimum. Second, select the year and month closest to your age on your retirement effective date. Then divide your pension enhancement amount by the corresponding annuity conversion factor. The result is the monthly amount added to your monthly benefit under the Carpenters Retirement Plan if you select a single life benefit. If you select one of the joint and survivor options, this amount will be reduced to provide for a survivor benefit for your spouse or other designated beneficiary.
Year/Month Factor
55 – 0
55 – 1
55 – 2
55 – 3
55 – 4
55 – 5
55 – 6
55 – 7
55 – 8
55 – 9
55 – 10
55 – 11

56 – 0
56 – 1
56 – 2
56 – 3
56 – 4
56 – 5
56 – 6
56 – 7
56 – 8
56 – 9
56 – 10
56 – 11

57 – 0
57 – 1
57 – 2
57 – 3
57 – 4
57 – 5
57 – 6
57 – 7
57 – 8
57 – 9
57 – 10
57 – 11

58 – 0
58 – 1
58 – 2
58 – 3
58 – 4
58 – 5
58 – 6
58 – 7
58 – 8
58 – 9
58 – 10
58 – 11

59 – 0
59 – 1
59 – 2
59 – 3
59 – 4
59 – 5
59 – 6
59 – 7
59 – 8
59 – 9
59 – 10
59 – 11

60 – 0
60 – 1
60 – 2
60 – 3
60 – 4
60 – 5
60 – 6
60 – 7
60 – 8
60 – 9
60 – 10
60 – 11

61 – 0
61 – 1
61 – 2
61 – 3
61 – 4
61 – 5
61 – 6
61 – 7
61 – 8
61 – 9
61 – 10
61 – 11

62 – 0
62 – 1
62 – 2
62 – 3
62 – 4
62 – 5
62 – 6
62 – 7
62 – 8
62 – 9
62 – 10
62 – 11

63 – 0
63 – 1
63 – 2
63 – 3
63 – 4
63 – 5
63 – 6
63 – 7
63 – 8
63 – 9
63 – 10
63 – 11

64 – 0
64 – 1
64 – 2
64 – 3
64 – 4
64 – 5
64 – 6
64 – 7
64 – 8
64 – 9
64 – 10
64 – 11

65 – 0
66 – 0
67 – 0
68 – 0
69 – 0
70 – 0
71 – 0

140.0753
139.9275
139.7797
139.6319
139.4841
139.3363
139.1885
139.0407
138.8929
138.7451
138.5973
138.4495

138.3017
138.1490
137.9963
137.8436
137.6909
137.5382
137.3855
137.2328
137.0801
136.9274
136.7747
136.6220

136.4693
136.3120
136.1547
135.9974
135.8402
135.6829
135.5256
135.3683
135.2110
135.0538
134.8965
134.7392

134.5819
134.4204
134.2589
134.0974
133.9359
133.7744
133.6130
133.4515
133.2900
133.1285
132.9670
132.8055

132.6440
132.4771
132.3103
132.1434
131.9765
131.8097
131.6428
131.4759
131.3090
131.1422
130.9753
130.8084

130.6416
130.4702
130.2987
130.1273
129.9559
129.7845
129.6131
129.4417
129.2702
129.0988
128.9274
128.7560

128.5846
128.4097
128.2347
128.0598
127.8849
127.7100
127.5351
127.3602
127.1853
127.0104
126.8355
126.6605

126.4856
126.3076
126.1296
125.9515
125.7735
125.5955
125.4174
125.2394
125.0613
124.8833
124.7053
124.5272

124.3492
124.1684
123.9877
123.8069
123.6261
123.4453
123.2646
123.0838
122.9030
122.7223
122.5415
122.3607

122.1799
121.9968
121.8137
121.6305
121.4474
121.2643
121.0811
120.8980
120.7149
120.5317
120.3486
120.1655

119.9823
117.7094
115.4097
113.0826
110.7391
108.3837
105.9531

 

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