This section explains the benefits payable from the Defined Contribution Part of the Plan that are different from those of the Defined Benefit Part and apply only to those participants who are participants of the Defined Contribution Part. If you are a participant in the Defined Benefit Part and are considering transferring to the Defined Contribution Part, it should be read in conjunction with Common Features, which describes the features, which summarizes the features common to both the Defined Benefit Part and the Defined Contribution Part.
Whilst an active participant of the Plan, contributions of six percent of your Pensionable Earnings will be deducted from your salary or wages and will be credited to your Participant Contribution Account. A further six percent of your Pensionable Earnings will be credited to your Employer Contribution Account on your behalf by your employer. The balances in both these accounts will increase each year with interest.
Example: Assuming that you join the Plan with an initial salary of $2,000 per month, you will be required to contribute $120 to your Participant Contribution Account each month. A further $120 will be credited to your Employer Contribution Account each month by your employer.
Your Accrued Benefit under the Defined Contribution Part is the sum of the balances in both your Participant Contribution Account and your Employer Contribution Account at the time of your retirement or death. These balances will reflect the contributions paid into these accounts by both you and your employer with interest.
Example: Table 1 below shows the total balances that might accumulate in your accounts by your Normal Retirement Age, if you join and leave the Plan at the ages shown.
From the table, you can see that if you joined the Plan at age 35 with an initial salary of$2,000 per month and you retire at age 60, then the total balance in your Participant Contribution Account and your Employer Contribution Account at your Normal Retirement Age might be some $363,627. This projection assumes that interest is credited at the rate of 8% per annum and assumes that your salary (and therefore your contributions paid) increases each year at the rate of 5.0 %. In practice, the rate at which interest is credited will vary each year and is not guaranteed.
Table 2 below shows the effect on the total account balances if interest was credited at the rates of 7%, 8 % and 9 % each year and you retired at your Normal Retirement Age of 60.
You can retire from the Plan and start to receive your pension in any of the following situations:
When you retire from the Defined Contribution Part, your Accrued Benefit (the sum of your two account balances) will be converted into a pension although you may elect to receive up to 25% of your Accrued Benefit as a lump sum payable immediately. The remaining balance will be payable in one of three different forms of payment, as explained below. The amount of pension payable to you will therefore depend on four items: the total of your account balances, the amount you have elected to take as a lump sum payment, your age (and the age of your spouse in some circumstances), and the form of payment which you elect.
An additional pension is payable in the event of a Duty-Related Disability - see Common Features.
The three forms of payment are Single Life Only, Single Life with Ten Year Guarantee and 50% Joint & Survivor.
Example: Taking the account balances in the previous example assuming that interest is credited at the rate of 8% each year and that you leave the Plan at your Normal Retirement Age of 60, then the resulting account balances might be converted into a monthly pension as shown in table 3 below (note for the 50% Joint & Survivor calculations we assume the spouse to be age 60 as well).
|Single Life Only||Ten Year Guarantee||50% Joint & Survivor|
From the table above, you can see that the total account balance of $345, 658 for a participant who joined the Plan aged 35 and left at age 60, was converted into a Single Life Only pension of $2,304 per month. If you instead elected a Ten Year Guarantee pension then the pension would be slightly lower at $2,218 per month. The 50% Joint & Survivor pension would be slightly lower again at $2,112 per month.
When looking at these projected pensions you should bear in mind the effects that inflation will have on the value of the pensions shown over a long period of time. To illustrate this, the table above also shows in parentheses, the same pensions as a percentage of final salary at your Normal Retirement Age. From this table you can see that the Single Life Only pension of $2,304 per month would be equivalent to a pension of approximately 36 % of final salary, assuming that salary increased each year at 5%.
If you die whilst an active participant of the Plan, leaving no dependent children, then your surviving spouse will be entitled to receive a pension payable for the remainder of his or her life, based on your Accrued Benefit (the sum of your account balances) at your death. In the event that you die leaving dependent children as well as a surviving spouse, then your spouse will receive a pension based on one-half of your Accrued Benefit at your death and your children will receive the remaining half of your Accrued Benefit split equally between them in a single lump sum payment.
If you die leaving dependent children but no surviving spouse, then your Accrued Benefit will be split equally between your dependent children and paid as a single lump sum. Should you die leaving neither surviving spouse nor dependent children, then the total of your Accrued Benefit will be paid as a lump sum to your designated beneficiary, or to your Estate.
If the total lump sum value, calculated in accordance with Plan actuarial tables, of the pensions payable to your surviving spouse and dependent children is less than twelve times your Final Average Pensionable Earnings at your death, then the balance will be paid as a lump sum to your designated beneficiary.
An additional pension is payable in the event of a Duty-Related Death - see Common Features.
Whether a benefit is payable upon your death after retirement depends on which form of payment you choose at retirement. For example, if you choose the Single Life Only form of payment, no further benefit will be paid on your death except for a refund of the remaining balance in your Participant Contribution Account, if any. If you choose the Single Life with Ten Year Guarantee form of payment, a lump sum will be paid as long as you die within ten years after your date of retirement as described above. If you choose the 50% Joint and Survivor form of payment, your spouse will receive a pension equal to 50% of the pension you were receiving at your death.
If you leave the Plan early for any other reason (for example if you leave to go to another job) then you will be entitled to a deferred pension, payable when you reach your Normal Retirement Age. Your deferred pension will be calculated as your Accrued Benefit, based on your account balances at your Normal Retirement Date, according to the form of payment you then elect.
In such an event, you have the following three options from which to choose: