Hoping that some of the smart people here can enlighten me on this subject. I completely understand how the GATT rate going up or down affects the lump sum amount but I do not quite understand how your age plays into the figure. I've been told by some that after age 55 your lump sum amount will ALWAYS start to go down a bit. Others have told me that the age where it will ALWAYS start to go down is more like 57-59. Is this even true? Is this formula written down somewhere and are employees allowed to see it if it is? Also, If you decide to take the pension rather than the lump sum, that amount only goes UP, never down, is that correct? Thanks for any info
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Anybody know if the pension band inceases each September of this contract will also increase the lump sum amount? TIA.
not OT, but it does include things like our joke of a profit sharing check and acting pay
Thanks for the info by supplemental I'm assuming means differential, car fare, special city allowance etc. and not ot?
I don't know where you work, but the calculation for supplemental payments for differential is explained on page 17 of the MidAtlantic Plan SPD on the eWeb. It answers all your retirement questions. It says to take your average annual supplemental payments for the last 3 years of service , multiply by .001 and then multiply by years & months of pension accrual service.
1bwc do you have an understanding and to how the lump sum is calculated based on differential pay? We have rotating late tour shift that are given away if you want to. some guys take the late Tour all the time I'm just wondering if it has to be constant or it can be sporadic and is calculated in some manner? People give away the late tour so they can work overtime they would actually have a higher salary than the late tour guy's so is it on your cycle rate or your yearly salary?
I think the different age where lump sums start to decrease is do to some people being in Management, and others being in the Union where the pension continues to accumulate. For Management, the pension was "Frozen" in 2006 and in that case as long as you meet the rule of 75, your lump sum will hit it's max (for each given GATT/PBGC rate) on the exact MONTH of your 55th birthday. Starting the next month your lump will decrease a small amount, because there is nothing else being added to the pot to offset the effect of the mortality tables.
For the Union folks... technically the same thing occurs, except your pension is not frozen and is still accumulating additional monthly benefits. Therefore while the mortality tables still take a bite, it is offset by your increased pension beni for the additional time in title that has passed. Likely moving the age where the mortality table starts to take a "bigger bite" than your increased monthly pension beni can overcome up a few years. So it's likely in the upper 50's for Union... but it's definitely your 55th birthday month for the "pension frozen" management folks.
For management, just use the manual online pension lump sum calculator in BenefitsConnection, and pick the months before and after your 55th birthday as a retirement date. Use the same interest rates every time, and you will see the lump increase on the way up to 55... then decrease on the back side. Union folks can probably find the year it starts to decrease as well using that tool... but while have to try a bunch of different higher ages until you finally find the turning point.
You are correct that the pension always goes up regardless of age. The formulas are pretty straight forward and in the plan documents they mail out. The amount owed you monthly is generally your pension band multiplier times the number of service years. Some have other additional amounts added for night or evening shift differentials and some other special circumstances. In the case of shift differential your last three years of service add to what they owe you. If you work shift the entirety of your last three years you will increase your nut by a full ten percent. If you worked shift for one half of the three years before leaving you would increase it by five percent etc. The lump goes down as you age because they owe you less money as you are older since you won't be alive as long to be paid it. It kind of works out like a physics formula with age having a downward force on the lump and years of service having an upward force on it. At a certain point years of service can't overcome the force of age and you will continue to have a smaller lump with all things being equal GATT and PBCG wise. Of course if the indices go down relative to a previous time they can overcome a loss incurred by an increase in age or vice versa if the indices go up they can further add to a loss incurred. In the end the lump one gets is essentially the amount deemed necessary to generate the amount owed you monthly at the rates of the time you cash out. In answer to the 56 or 57 question, it does seem that the sweet spot is around there for most cases.
Just follow Donnies twitter feed and you will gets lots of lumps but not so many sums.
Pension annuities don't change. Lump sums calculations factor mortality tables, in addition to interest rates, into the equation. The older you are, the lower your life expectancy. You can get more in depth information from your plan's SPD on net benefits.