Layout errors made BA Ric Casilli’s column in the June 10 issue of the 201 News unintelligible.
Here is the corrected version:
IMPROVED PENSION UPDATE FORMULA - IMPORTANT 2015 GE CONTRACT DEMAND (Covering 2009-2014 years)
With over 50% of Local 201 GE members reaching the optional retirement age of at least 60 during the 2015 Contract, it is critical that the next labor agreement have decent pension improvements, especially in the Pension Update, Guaranteed Pension Tables and the Pension Supplements. Improvements in these 3 areas will impact only members still working in our Defined Benefit Pension Plan and not affect any current retirees.
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.
The Pension Update is a critical piece of the Pension plan which is used to “update” your previous pension earned through your career when your earnings were usually much lower. Without an update, you will not get a high enough pension to replace a decent target percentage of your current higher wages due to the drag of many lower earning years. The “update” partially fixes that built in flaw to the GE Pension plan
Below is the current 2011 Pension Update (uses best 3 consecutive of 2005 -2010 years) formula and how it applied to increase many of our members’ pensions. Once you get an update – you do not ever lose the impact of that update. The Union will be seeking another update and an improvement in this Pension Update formula in the 2015 Contract Negotiations, as well as improvements in the guaranteed pension tables, pension supplements etc.
2011-2015 GE Contract Pension Update
Using the current 2011 Pension Update Formula your pension is figured out until the end of the year 2010. Earnings you have for the years 2011 and after are added on to the 2010 Update figure (if you are eligible and it increases your earned pension through 12- 31-2010). 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 2011 were added on by multiplying the first $40,000 of earnings by 0 .0145 and all earnings in excess of $40,000 by 0.019. An employee who earned $90,000 in 2011 would have:
$40,000 X 0 .0145 = $580.00 + $50,000 X 0.019 = $950.00
$1,530.00 annually or $127.50 monthly added to their pension for the year 2011
In 2012 the formula changed by now multiplying the first $45,000 by 0.0145 and any excess earnings above $45,000 by 0 .019
2012 Example #1: An employee who earned $90,000 in 2012 would have
$45,000 X 0.0145 = $652.50 + $45,000 X 0.019 = $855.00
$1,507 annually or $125.58 monthly added to their pension for the year 2012
The formula used for 2012 will also be used for the years 2013, 2014, and 2015 pension earnings.
Pension Update through 12-31-2010 (apply the Pension Update Formula below to see if it improves your regular pension earned through 12-31-2010)
1) Add up earnings for your best 3 consecutive years between 2005-2010 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 0.85% (.0085) times average annual pay UP TO $45,000 .0085 X $45,000 = $382.50
4) Multiply 1.45 % (.0145) times annual pay OVER $45,000
5) Add line (3) to line (4); then multiply that total times your PBS as of 12/31/2010. Example: [(3) $382.50+ (4) $_________ ] X ________PBS years = Update figure through 12-31-2010
The participants’ existing December 31, 2010 regular pension is calculated including all previous increases already credited to the participant.
It is then compared to the person’s pension applying the 2011 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 12-31-2010.
That amount is then ADDED to the 2011, 2012, 2013, 2014, 2015 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 $82,000 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 2011 Contract current multipliers and/or break points under the 2015 Contract.
If our next Contract were to remain a 4 year contract (2015-2019) and if the Pension Update was to retain the same structure, one would be applying their best three consecutive years between 2009 and 2014 to a newly negotiated Pension Update formula.
The current Pension Update formula is 0.85% (up to $45,000) and the 1.45% (earnings in excess of $45,000) as shown in the example above, using your best 3 consecutive years between 2005-2010. We need improvement.
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 the above example.
Some members also confuse the current Pension Update period used (highest consecutive 3 years of earnings of the 6 year period between 2005 and 2010) 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 using the Career Earnings Pension Formula and Updates