Pension amount after NRA

Worked 14 years 1997-2010, took lump sum from defined pension. Returned to hospital in 2016 at age 62 with intent to work until age 70. Was told I would need to work 5 years to be vested. In 2021 hospital was bought out and pension was frozen, employees were gifted an additional 4-7 years of vesting deep on age and wages. Moneys were give to an actuary and all employees are now being offered a window to receive a lump sum. I don’t want a lump sum. I had returned to work specifically to earn an annuity and expected that if I were offered an annuity of $1000 at ERA after 14 years at half the wages that I would now at double the wages and 8 years vested look forward to at least half of that. In addition my lump sum in 2010 was over $100,000. So I would expect a lump sum of at least half of that after 8 years vested at double wages. I was offered a tiny annuity and small lump sum. When I question it to the actuary handing the funds, this is the reply I got….  Can anyone here help me understand this? I feel discriminated against because I am over 65. and disappointed because I thought I could keep working and earn another pension to help me when I planned to fully retire at 71.  

Hello, This email is in reference to your recent question regarding your XXX Pension Benefit. The current benefit amount that would commence on 11/01/2021 is $14,589.23 as a lump sum and $127.86 as a life annuity. This benefit is less than your previous lump sum benefit in 2010 because of how the plan calculates benefits after a benefit has already been received. The plan states that if a participant is rehired after receiving a lump sum payment, and earns additional benefit service, their benefit is calculated as if no payment was made. The amount of the lump sum previously paid is increased with interest at 8% per year. Therefore, because of this high 8% interest rate being added to your previous lump sum during the calculation, your benefit is less than before. If you chose to wait until you reached age 70 your benefit would decrease to $0.00. This is again due to the high interest rate being added to your previous lump sum benefit during the calculation. If you have any other questions, please let us know. Thank you,

I asked for clarification… and got this…

We apologize for the confusion.  Let us try to explain the offset better so it may make more sense.If a Participant is rehired after receiving a lump sum payment (which fits your scenario as you took a large lump sum in 2010) , and earns additional benefit service, their benefit is calculated as if no payment was made. The resulting lump sum value, at the new payment date, is reduced by the amount of the lump sum previously paid increased with interest at 8% per year. The final present value is then converted to an annuity.  In your case what is happening is, since the plan froze and no benefits are being earned, the offset is growing faster and will eventually wear away any additional benefits. Since you were over 65 at 2/1/2021 you should have received a separate packet prior to the lump sum offering that back dates your lump sum amount to the first eligible payment date.  That is the date that your lump sum will be greatest since the offset will continue to wear away your benefit.  If you need that reprinted please let us know.

I have not received a reprinted backdated offering  even thought I asked. 
Nor can I get them to give me a copy of the pension plan with the rules they are stating. One customer service person told me it was federal law being followed. I am real savvy with my nursing skills but I am lost with this stuff. I really feel like they are stealing my pension. Thanks 

Your actuary is likely following the rules stated in the plan document to the letter.  This is my personal opinion and I could be wrong, but I would follow the actuary's advice and take the benefit now since it will continue to decrease.  

You can ask the plan sponsor (your employer) for a copy of the plan document but know that this is literally their specialty.  Again, they could be wrong and actuaries have and do make mistakes on this stuff, but I doubt that they are in this case.

There are several alternative methods for handling rehired participant who previously received a distribution.  As Hojo said, the actuary appears to be following one of those methods.  In order to know if that method is appropriate,  you should request a copy of the plan document.  The plan is only permitted to offset for prior distributions if it is explicitly stated in the document.  If the plan document does not explicitly state the benefit should be offset for prior distributions, then they should give you the additional accruals without the offset.  

Make sure to request a copy of the document that was in effect in 2016, and any subsequent plan amendments.  Also as Hojo said, this will be a legal document, full of a legal phrases, but there is usually a section specifically related to Late Retirement or Postponed Retirement or Rehired Participants that will contain the language you will need to review.  Also, request a copy of the Summary Plan Description.  This will be written in plain English, but it might not be specific enough for what you are looking for.  

Are you being given the opportunity to pay back the lump sum?

@maryflemingphr no they have not. 

I have repeatedly asked for a copy of the plan but get no joy from the HR team or the actuary. I only have til 10/30 to accept the offer and no one can tell me what will happen if I don’t accept that offer other than the 8% decrease. The original opening date was In July, and at that time my offer was $4000 less than it currently shows. So the 8% reduction is even more confusing to me. 
thanks for opinions. Looks like I have no choice but to accept the offer, then investigate deeper to see if I am being short changed. 

You have a legally protected right to a copy of the plan document.  The Plan Administrator must provide it upon written request.  Send the Plan Administrator a written (paper) request for a copy of your benefit calculation worksheet, the Summary Plan Description, and the Plan Document, including all amendments and attachments.  They may charge you a reasonable copying fee.

The only way to know if they did the calculation correctly is to see the plan document.

But yeah if time is up it might be a good idea to take it and have it checked later.   Just read what you sign before you sign it.

When you get the document, check and make sure the 8% is specified in the document because that is high these days obviously.