Effect of Service After 1999
Answers to Your Questions About Retirement
| Service credit in this Plan was frozen for most employees at the end of 1999. A new defined contribution plan was started on January 1, 2000. This section explains how service after 1999 may impact your benefits in the frozen defined benefit plan. | ||||||||||||||||||||||||||||
| Q | If I do not have enough service credit in the frozen defined benefit plan at the time of the freeze, can I count service after 1999 toward vesting and other qualifying thresholds? | |||||||||||||||||||||||||||
| A | Yes. Up to ten post-freeze years will count towards meeting minimal qualifying vesting thresholds under the pre-freeze plan up to 12/31/2014. You do NOT earn additional benefit service credit. Post-freeze service credit is considered only for purposes of reaching certain service thresholds. The qualifying thresholds that can be reached by post-freeze service include:
There is one other eligibility threshold which can be reached by post-freeze service, and that is recovery of lost service credit due to breaks in service. Unlimited post-freeze service can be used to meet this requirement (normally 25 years). | |||||||||||||||||||||||||||
| Q | Will retirement benefits earned prior to the year 2000 in the defined benefit plan be combined with benefits earned after 1999 in the defined contribution plan? | |||||||||||||||||||||||||||
| A | No. They are separate plan types. The frozen Plan described in this booklet is a pension plan which provides a flow of funds until death of the retiree and eligible spouse. The new defined contribution plan described elsewhere accumulates a lump sum which can be converted to an annuity, cashed out or invested at the option of the retiree. | |||||||||||||||||||||||||||
| Q | Does anyone continue to earn service credit in the defined benefit plan after the freeze date of December 31, 1999? (Z 15 20) | |||||||||||||||||||||||||||
| A | Yes. A few employees qualified for and chose to apply for the Career Completion Option. This is a plan which enables employees to continue to earn up to a maximum of five additional years of service credit under the frozen plan. The window of opportunity for such an application closed on 12/31/99. | |||||||||||||||||||||||||||
| Q | Is there a 'safety net' to assist those who may be disadvantaged by the freeze of this Plan? | |||||||||||||||||||||||||||
| A | Yes. For those eligible to retire by 12/31/2020, upon retirement the Plan will calculate the monthly benefit of the frozen single life annuity, plus an estimate of what the employer-contributed account balance in the new plan would be if invested in the plan designated 'default' strategy, converted to a single-life annuity. This 'combined annuity' will then be compared with what the single life annuity would have been had the plan not been frozen. If the 'combined annuity' is less than the 'no-freeze annuity', the Plan will top-up the single life annuity by the amount of the shortfall. This Transitional Enhancement is designed to protect employees from possible reductions in the single life annuity benefits. It is not designed to replace the elimination of health care assistance or spouse allowance for post-freeze service. Example: Joe Bozinski retires at age 66, single, after 34 years of service with the church. Thirty of those years were under the frozen defined benefit era, and four years were after the freeze, under the defined contribution plan. Regardless of where Joe actually invested his defined contribution employer contributions, the plan estimates that employer contributions, including the Basic and the Match, if invested in the Moderate, Socially Screened model, would equal $10,000. The following table shows how a Transitional Enhancement is calculated:
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- Phone: 269-471-3302
- Email: hr@andrews.edu