NEW YORK DISTRICT COUNCIL OF CARPENTERS PENSION PLAN
NOTICE TO MEMBERS
December 15, 1998
This notice is being sent to you to advise you of recent amendments that have been made to the Plan. Please keep a copy of this notice with your copy of the Plan's Summary Plan Description.
The goal of the Plan is to provide you with a source of income for your retirement that reflects your years of service. Effective January 1, 1999, several provisions under the Plan have been revised. Since the vested benefits that you may accrue under the Plan can amount to a significant portion of your income after you retire, it is important that you be aware of these changes and understand their importance.
Vesting. Effective January 1, 1999, the Plan's vesting schedule has been changed. The Plan currently provides that you are vested in your benefit, which means you have a nonforfeitable right to your benefit, when you have earned ten (10) vesting credits. You may earn up to one vesting credit in a calendar year. The Plan was recently amended to provide that anyone who is a Plan participant and completes more than one hour of service under the Plan on or after January 1, 1999 will become vested when he or she earns five (5) vesting credits, at least two (2) of which were earned after 1970. A participant who terminates employment with less than ten (10) vesting credits on or before December 31, 1998 is not vested.
Break in Service. The rules for determining restoration of vesting credit following a break in service have been revised. If you work in employment covered by the Plan on or after January 1, 1999 and you earn five vesting credits, you will not lose your previous vesting credits and you will at all times have a nonforfeitable right to your benefit under the Plan even if you incur a break in service. A break in service occurs in any calendar year in which you do not earn credit for at least 300 hours of service. If your vesting credits are four or less, you will incur a permanent break in service after you have five consecutive one-year breaks in service. In such case, all of the vesting credits and benefits you previously earned will be canceled. As under the old break in service rules, if you work at least 870 hours in two consecutive years before you incur a permanent break in service the vesting credits that you previously earned *ill be restored.
Elimination of the Forty-year Cap on Benefit Accruals. Under the current formula, a maximum of forty combined past pension credits and benefit credits is recognized in determining your benefit. The Plan was amended to eliminate the forty credit limit in determining your monthly benefit for your period of employment beginning January 1, 1999. This change is intended to provide a fairer retirement benefit by recognizing all of your years of service worked after January 1, ] 999 in determining your monthly pension. If you had more than 40 years of service on December 31, 1998, the forty-year cap on your pension and benefit credits will be applied in determining your monthly benefit through December 31, 1998; however, you will be able to increase your monthly benefit for your period of employment beginning on or after January 1, 1999. Let's look at an example.
|Your Monthly Benefit for your Period of Employment Through December 31, 1998, Limited by the 40 Credit Cap||As determined under the old formula||$3,200|
|Benefit earned for 1999||1,000 x $4 x .0135||$54|
|Benefit earned for 2000||1,000 x. $4 x .0135||$54|
|Benefit earned for 2001||1,000 x $4 x .0135||$54|
|Total monthly benefit at January 1, 2002||$3,362|
Coverage Extended. The Plan was amended to include employment at the Javits Center for the period July 1, 1995 through July 16, 1995 for purposes of participation, vesting and benefit credits.
The July 1, 1997 valuation of the Plan showed that the annual contributions needed for the Plan's long-term solvency are roughly double the expected contributions based on current benefit levels and hours worked. The Plan will not be able to meet its long-term obligations to you if this gap is not bridged. Accordingly, the Trustees have made the following revisions to the Plan's benefits, in order to achieve sound funding and ensure the security of your retirement income:
New Benefit Formula. The Plan has adopted a new benefit formula that will become effective on January 1, 1999. Under the new formula you will earn a monthly benefit equal to 1.35% of the annual employer contributions made to the Plan on your behalf jjs provided you work at least 300 hours of service in a calendar year. The new formula is designed to more accurately reflect your hours of service and employer contributions amounts made on your behalf. The benefit you have earned under the old formula through December 31, 1998 will be preserved. If you have at least 300 hours of service in a calendar year after January 1, 1999, your monthly benefit will be determined by adding the benefit you earned under the old formula for your period of employment through December 31, 1998 together with the benefit you earn under the new formula for your period of employment beginning on or after January 1, 1999. Your total monthly benefit will therefore be the sum of your benefit calculated under the old formula and under the new formula. Let's look at an example.
The new benefit formula described above will also apply in determining the amount of any pro-rata pension payable under the Plan with respect to service after December 3 1, 1998. In general, a pro-rata pension may be provided for a participant who would not otherwise qualify for a vested benefit because his or her service was divided between this Plan and certain other related plans, if such participant's combined vesting credits under this Plan and such other plan(s) would have entitled him to a vested benefit. If the Board of Trustees has entered into an agreement with such related plan(s) to provide a pro-rata pension in these circumstances, a pro-rata pension will be payable from this Plan based on any benefit credits earned before 1999 and the monthly benefit, if any, earned under the new formula for years after 1998 provided you work at least 300 hours of service under this Plan in each calendar year.
S500 Minimum Pension. The Plan currently provides a minimum pension of $500 to: a participant in outside employment, core drilling, retail maintenance employment or "Specialty I" employment who has accumulated at least (10) vesting credits and to a participant in shop employment, industrial shop employment, or "Specialty II" employment who has accumulated at least fifteen (15) vesting credits. The Plan was amended, effective January 1, 1999, to eliminate the $500 minimum pension and to provide a prorated portion of the minimum benefit based upon vesting credits accumulated before January 1, 1999. Under the amendment, if a participant has (1) accumulated at least ten (10) vesting credits or (2) more than one hour of service under the Plan on or after January 1, 1999 and accumulates at least five (5) vesting credits, then such participant shall receive a prorated portion of the $500 minimum pension based upon vesting credits earned as of December 31, 1998. For example, if you work in core drilling, have two (2) vesting credits as of December 31, 1998 and terminate employment on January 1, 2005 with eight (8) vesting credits, the minimum benefit that you receive under the Plan will be at least equal to 2/10 of $500 or $100. If on the other hand you worked in shop employment and had twelve (12) vesting credits when you terminated employment on December 31, 1998, the minimum benefit that you will receive under the Plan will be 12/15 of $500 or $400. For purposes of determining whether the prorated portion of the $500 minimum benefit is based on ten vesting credits or fifteen vesting credits, the category of employment will be determined according to the type of work in which in which the majority of your hours of service were performed before January 1, 1999. The $500 minimum pension will be reduced for payment in any form other than as a single life annuity. The $500 minimum pension is not applicable to pro-rata pensions.
Participant and Spouse Pension. The Plan currently provides that the Normal Form of Payment is a Single Life Annuity. If you are married, your benefit will automatically be paid as a reduced 50% Participant and Spouse Pension, unless you elect another form of payment. You may also elect a reduced 75% Participant and Spouse Pension. Your monthly benefit in the form of a 50% or 75% Participant and Spouse Pension is a percentage of your monthly benefit as a Single Life Annuity, based on conversion factors set forth in the Plan that vary with the age of your spouse. The Plan was amended, effective January 1,1999, to change the method for determining the amount of the 50% and 75% Participant and Spouse Pensions for participants who are eligible to receive a regular pension or a disability pension. The new method will provide participants who elect a 50% or a 75% Participant and Spouse Pension with a monthly benefit that has an actuarial equivalent value to the Single Life Annuity. The new conversion factors reflect the difference in the expected duration of the payment periods under the Single Life Annuity and the Participant and Spouse Pension; this is because the Single Life Annuity is paid over a single lifetime and the Participant and Spouse Pension is paid over a potentially longer period, since it provides for benefit continuation to the surviving spouse after the death of the participant. If you elect a 50% or 75% Participant and Spouse Pension, you will automatically receive the greater of: your monthly benefit accrued through December 31,1998 under the old method; or your monthly benefit payable as of your pension starting date under the new method.
50% Pre-Retirement Surviving Spouse Benefit
If you are married and die before you begin receiving pension payments, the Plan provides your spouse (to whom you have been married for at least one year prior to your death) with a monthly payment of 50% of the monthly benefit you would have received if you had retired and elected a 50% Participant and Spouse Pension. The Plan was amended, effective January 1, 1999, to change the method for determining the amount of the 50% Pre-Retirement Surviving Spouse Benefit. The new method will provide the eligible spouse of a participant who dies on or after January 1, 1999, with a monthly benefit equal to 50% of the adjusted monthly benefit that the participant would have received under a 50% Participant and Spouse Pension that is the actuarial equivalent of a Single Life Annuity. This change is consistent with the change described above under Participant and Spouse Pension.
$3,500 Lump Sum Benefit. The Plan currently provides a lump sum benefit of $3,500 to the designated beneficiary of a participant who dies while receiving pension payments. The $3,500 lump sum benefit will no longer be provided under the Plan with respect to pensioners who die on or after January 1, 1999. However, effective January 1, 1999, the amount of life insurance provided under the New York District Council of Carpenters Health and Welfare Fund has been increased. Please see the section on Life Insurance in the enclosed HEALTH AND WELFARE FUND - NOTICE TO MEMBERS for further details.
36-Month Extended Benefit. The Plan currently pays 36 additional monthly payments to the surviving spouse of a retired participant who does not elect to receive a Participant and Spouse Pension. Effective January 1, 1999, the 36-month extended benefit will only be paid with respect to your monthly benefit that you have accrued through December 31, 1998.
60-Month Certain Death Benefit. The Plan currently provides that instead of receiving a pre-retirement death benefit in the form of a 50% Pre-Retirement Surviving Spouse Benefit your spouse may elect to receive 60 monthly pension payments if you have been married for at least one year before your death and have at least ten vesting credits. If you are not survived by your spouse or your spouse dies before receiving 60 monthly payments, the Plan currently provides that the remaining payments will be divided in equal shares among your surviving children who are younger than age 21. This 60 month benefit will no longer be provided with respect to participants who die on or after January 1,1999
This notice is intended to explain the changes to the Plan in non-technical terms. In the event there is any difference between this notice and the Plan document, the terms of the Plan will govern.