Improve Pension Update Formula

IMPROVED PENSION UPDATE FORMULA - IMPORTANT 2011 GE CONTRACT DEMAND

By Ric Casilli, Business Agent

With approximately 50% of Local 201 GE members hitting retirement age during the next 2 Contract periods, it is critical that the next 2 labor agreements have decent pension improvements, especially in the Pension Update, Guaranteed Pension Tables and the Pension Supplements. This article focuses on one of these 3 key areas of the pension plan - the Pension Update. Former Plant IV Board member Fred Merchant Jr. used to write about how important this update was for many Local 201 members, especially after it was lost in the 1997 Contract and regained in the 2000 Contract. Below is the current Pension Update formula and how it applied to increase many of our members’ pensions. The Union will be seeking an improvement in this Pension Update formula in the 2011 Contract Negotiations, as well as improvements in the guaranteed pension tables, pension supplements etc.

2007-2011 GE Contract Pension Update

Under the current (2007-2011) Pension Update Formula your pension, your pension is figured out until the end of the year 2006. Earnings you have for the years 2007 and after are added on to the 2006 Update figure (if you are eligible and it increases your earned pension through 12-31-2006). To add on these years, most people will use the Pension Earnings Career Formulas for their calculations

Using Careers Pension Earnings formulas

Example: Earnings in 2007 were added on by multiplying the first $35,000 of earnings by 0 .0145 and all earnings in excess of $35,000 by 0.019. An employee who earned $80,000 in 2007 would have;

$35,000 X 0 .0145 = $507.50

+ $45,000 X 0.019 = $855.00

$1,362.50 annually or $113.54 monthly added to their pension for the year 2007

In 2008 the formula changed by now multiplying the first $40,000 by 0.0145 and any excess earnings above $40,000 by 0 .019

2008 Example #1: An employee who earned $80,000 in 2008 would have

$40,000 X 0.0145 = $580.00

+ $40,000 X 0.019 = $760.00

$1,340.00 annually or $111.67 monthly added to their pension for the year 2008

The formula used for 2008 will also be used for the years 2009, 2010, and 2011 pension earnings.

Pension Update through 12-31-2006 (apply the Pension Update Formula below to see if it improves your regular pension earned through 12-31-2006)

1. Add up earnings for your best 3 consecutive years between 2001-2006.

Total =___________.

2. Divide by 3=____________. This is your best 3 year average out of the 6 possible years to use for this update

3) Multiply 0.80% (.008) times average annual pay UP TO $37,500

.008 X $37,500 = $300

4. Multiply 1.45 % (.0145) times annual pay OVER $37,500

5) Add line (3) to line (4); then multiply that total times your PBS as of

12/31/2006. Example: [(3) $300+ (4) $_________ ] X ________PBS years =

Update figure through 12-31-2006

The participants existing December 31, 2006 regular pension is calculated including all previous increases already credited to the participant.

It is then compared to the person’s pension applying the 2007 Contract Pension Update formula above. If the formula above provides for a bigger pension amount- the individual is credited with that amount for his pension through 12-31-2006.

That amount is then ADDED to the 2007, 2008, 2009, 2010, 2011 amounts

calculated by using applying the career pension earning formulas (first illustration above) or the by using the Guaranteed Pension table multipliers if one has wages close to or below $73,000 annually in any of these years.

This will give someone their up to date pension calculation.

As stated we will be looking to IMPROVE the 2007 Contract current multipliers and/or break points under the 2011 Contract.

If our next Contract were to remain a 4 year contract (2011-2015) and if the Pension Update was to retain the same structure, one would be applying their best three

consecutive years between 2005 and 2010 to a newly negotiated Pension Update Update formula.

The current Pension Update formula is 0.80% (up to $37,500) and the 1.45% (earnings in excess of $37,500) as shown in the example above, using your best 3 consecutive years between 2001-2006. We need improvement.

NOTE:

Some members confuse the Pension Update Formula with the Career Earning Pension Formula. They are totally different formulas used differently as can be seen

in above example.

Some members also confuse the current Pension Update period used (highest consecutive 3 years of earnings of the 6 year period between 2001 and 2006) with the Guaranteed Pension Table period used (highest consecutive 3 years of earnings of the last 10 completed years before retirement).

The Guaranteed Pension Table was NOT the subject of this column and is used only when it increases the amount of an employee’s pension above the amounts provided by the using the Career Earnings Pension Formula and Updates.