Actuarial Increase After Freeze

[Guest Don N]

Just wondering if anyone has had any experience with the following:late or deferred retirees get the greater of an actuarial increase or continued accrual;does a freeze amendment supercede the plan's provisions regarding late retirees? a cite would be great also.

[david rigby]

Elevating this question, anyone have an opinon, or cite, on the question of how a plan freeze affects the "actuarial increase" provision? (I found nothing in the ERISA Outline Book, and nothing in the Gray Book.)

[FAPInJax]

I will offer my two cents!

The freeze does not affect the actuarial increase. This continues to occur unless a benefit suspension notice is given. This eliminates the actuarial increase for some time - although I believe that the beginning of minimum distributions causes the actuarial equivalent increases to commence regardless of freeze or benefit suspension notice.

[mwyatt]

Conceptually, an actuarial increase for late retirement isn't really giving anything more to the participant; it's only compensation for receiving fewer payments in the whole scheme of things. I would argue that a pure actuarial increase wouldn't (and shouldn't) be affected by a freeze amendment. As far as the year by year comparison with the benefit computed as if ARD is NRD, you'd obviously reflect the freeze amendment, so eventually your future adjustments would just be by your Late Retirement increase factors.

[david rigby]

I agree with Frank and mwyatt.

To complete the documentation, I called Jim Holland this morning. His response was essentially the same: "It depends". Specifically, it depends on whether the suspension notice is given. If no notice, then failure to apply the actuarial increase would be an impermissible forfeiture of benefits.