Pension
Enhancement Option
If you retire on
or after January 1, 2001, you can use all or a portion of your account balance
in the Carpenters of Western Washington Individual Account Pension Plan to
increase your monthly benefit under the Carpenters Retirement Plan of Western
Washington. 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 the 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 this
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.
- The
Carpenters Retirement Plan and the Carpenters Individual Account Pension Plan
were amended effective January 1, 2001 to accommodate the pension enhancement
option.
- The
following examples illustrates how the pension enhancement option
works:
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Calculations
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You retire at age 62 with a single life benefit of
$2,000.00. You elect to use a portion of your Carpenters Individual Account
Pension Plan to increase your $2,000.00 monthly benefit under the Carpenters
Retirement Plan. The following three examples illustrate how this can be done.
The annuity conversion factors are listed in Table 4.
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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).
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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 monthly benefit under the
Carpenters Retirement Plan. This amount is subject to the joint and survivor
reduction (if applicable).
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Example 3
You
would like to increase your $2,000 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).
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For
additional information about the pension enhancement
option, please see Article 10.5.
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