Increase in Base Retirement Benefit for Delayed Retirement

[Guest MDG]

The plan is a union/emplyer taft hartley pension plan. Normal retirement age is age 65. The plan is silent on delayed retirement.

Question: If a participant delays receiving benefits past age 65, must the plan actuarially adjust the participants benefit to reflect the delay?

Question: If yes, what mortality table and interest rate would be applicable?

Any help is appreciated.

[KJohnson]

Did you check the suspension of benefits section?

You might want to look at these posts:

http://www.benefitslink.com/boards/index.p...t=0entry78972

http://www.benefitslink.com/boards/index.p...t=0entry35224

[Guest MDG]

KJohnson

Thank you for the reply and links. I have reviewed them and see this is not a crystal clear area. I have also reviewed the plan document.

Again, this is a typical union taft hartley plan. The plan doc does address suspension of benefits, but only for the purpose of suspending benefits to a retiree who engages in covered employment. There is no reference to what happens if you continue working other than you continue to receive contributions/accruals.

I am not aware of any notice ever being provided to an active participant at age 65. The only notice I have seen re: suspension was for working in covered employment.

From reading the posts in the links provided, am I correct in that the plan is required to provide a notice to a participant if their benefits will be suspended at age 65 (NRA)?

[KJohnson]

It is not required, but it is advisable. Sending the suspension of benefits notice means that you do not have to give the actuarial increase. I have worked with several multis who referred to this as the "birthday letter" when a participant turns age 65 and is still getting credited service under the plan. I haven't looked at this for a while, but even if you don't send the notice I think you can offset your actuarial increase by post-age 65 service. It would seem that this would be o.k. if our plan document is really silent on any actuarial increase. This is a bit dated, but it is a good link:

http://benefitslink.com/ppib/industrynews/...orrection.shtml

[Guest MDG]

Assuming the notice was not provided and the plan is obligated to do the calculation...

What is the proper method? Should the Plan actuarially adjust the NRA benefit and compare it to the current accrued benefit (say at age 67)? Should the Plan recalculate the actuarial equivalent each year?

Also, in determining the actuarial equivalent, what mort. table and interest rate should be applied?

Thanks again for all of your help.

[KJohnson]

Probably time for the actuaries to chime in...and I am not one of them. However, I would think it would only be an issue when you get ready to make a distribution.

[Effen]

http://www.benefitslink.com/boards/index.php?showtopic=14462