Union Sponsered Defined Benefit question

[Guest Brent_Hyatt]

Recently my union sponsered defined benefit pension program amended its rules as follows:

A participant with 30 pension credits can retire at 55 years of age and draw full benefits. A vested participant with less than 30 pension credits at 55 years of age will be subject to a decreased benefit amount up to 9% of the credit value he has actually accumulated. Since the participant only receives payment on his actual number of credits, this rule benefits only an elite few. This seems illegal. Is there a violation of any ERISA ruling here?

[Alf]

The full benefit must be payable at normal retirement age, but the union has a lot of discretion to develop a benefit formula. Any provision for payment prior to normal retirement age is optional and can be structured as you describe.

[KJohnson]

Such provisions are very common in multiemployer or collectively bargained plans.

Many even have "30 and out" provisions which allow full benefits with 30 years of service without regard to age. Because you do not qualify for this subsidized early retirement benefit, it appears that you are subject to an "actuarial reduction" for taking your benefit early. Even then a 9% reduction at age 55 probably still reflects a generous subsidy for early retirement.