Improve Guaranteed Pension Tables

 

Business Agent’s Column

 

By Ric Casilli

Business Agent

 

 

GE CONTRACT 2011: NEED IMPROVED GUARANTEED PENSION TABLES

 

In my last column, I spoke about how important the Pension Update being renewed and improved would be essential for the many Local 201 members hitting retirement age under the 2011 Contract. Most Local 201 members retire using the career annuity and pension update formulas, as do some other important GE Locals on the higher end of the wage rate/ overtime scale.

 

However, there are also Local 201 members, with lower wage rates and less overtime, that will retire under the 2011 Contract but use Guaranteed Pension Tables as such tables will provide a higher pension then using the career annuity and pension update formulas. There are also many GE Locals, across the country, which have lots members that will need to use such guaranteed tables.

 

The current negotiated Guaranteed Pension tables are calculated by taking a members “High -3 pay”, which is the average of your annual pay during the 3 full consecutive years that you participated in the Pension Plan and earned the most during the last 10 calendar years before your retirement. ( Note: do not confuse this with the current Pension Update calculation periods- which is your best 3 consecutive calendar years of a 6 year period between 2001- 2006).

 

So, if a member is a relatively lower wage earner with less overtime- that person would use the Guaranteed Pension tables rather then the career annuity formulas and pension update formulas.

 

Here is an example of how the Guaranteed Pension works

 

Example: If a person was retiring on Jan 1, 2011 and their highest earning years between 2001 and 2010 happen to be the person’s last 3 years of 2008, 2009 and 2010, then those are the years that member would use. Let’s say the person’s earning were $67,000 in 2008, $69,000 in 2009 and $71,000 in 2010. That person’s average pay for that period would be $69,000. You go to the Guaranteed Pensions table on page 53 of

your Retirement Plan Handbook Summary (Legacy Provisions) and you will see that the table shows a monthly multiplier of $65.50 for their average high 3 wage years as their earnings are between the tables bracket of $68,500 and $69,250. We will assume the member had 35 years Pension Benefit Service (PBS). You then multiply the $65.50 X 35 years PBS = $2,292.50 guaranteed monthly pension. If your calculated pension under the career annuity formulas and pension update formulas are lower then this, then you receive this “guaranteed” pension amount of $2,292.50.

 

(Note: This amount does NOT include any amounts of money you may in your Personal Pension Account (PPA), any amounts of money you have if you participate in the Voluntary Pension Account (VPA), OR any small monies from the 1997 “pension adder” if you are real long service and qualify for that. It also does not include any of the pension supplement monies that one may qualify for.)

 

The current Guaranteed Pension Tables start at the low end with a monthly multiplier of only $34.00 if a person’s average 3 year consecutive wages are only “up to and including $37,750.” Calculating using the method shown in the same example above, that persons annual monthly pension would only be $1,190 ($34.00 X 35 years PBS) At the high end of the table, a person with an average 3 year consecutive wage over $73,000 would have a monthly multiplier of $70 with 35 years PBS would have a guaranteed monthly pension of $2,450. (Note: Most Local 201 members, that need to use the Guaranteed Pension Tables, would be using the multipliers at the higher end of the table.)The multipliers range is from the $34.00 at the bottom to $70.00 at the top.

 

As one can see, again using as an example a member with 35 years Pension Benefit service, one’s monthly pension only would increase $35.00 for every $1.00 the multiplier is improved.

 

During the 2007 National Contract Negotiations, the table multipliers were improved on average about $1.00 for only a $35.00 monthly pension increase. However, the top end of the table (over $64,000 annual earnings) was extended up to over $73,000 annual earnings with monthly multiplier improvements ranging from $1.00 to $10.00 as you approach the$73,000 mark (the top of the table). Thus, if you were taking a pension based on earnings just over $73,000 – the tables would provide a $350.00 monthly pension improvement. (Note: Remember- individuals with much higher annual wages would not be using these “guaranteed tables” at all but using the career annuity and/or pension update formulas)

 

During the 2011 National Contract Negotiations, it will be important to significantly improve all the guaranteed table monthly multipliers, especially the ones in the higher table ranges.

 

In summary, Local 201 shall be supporting improvements in the Pension Update formula (a majority of 201 members use this) AND the Guaranteed Pension multipliers; especially considering the large number of retirements anticipated over the next few years in Lynn.

 

In a future column, I will discuss a 3rd critical piece of our Pension package- the two important pension supplements that help bridge the retirement period until one is eligible for 80% Social Security