Let's take a look at an example of a benefit calculation to see how these limitations affect the benefits for your plan.
Our example is a participant who retired under the 30 Year Retirement type and has Part A and Part B benefits.
This type of retirement requires at least 30 years of credited service and is payable at any age.
The 30 Year Retirement type provides a Part A Basic Benefit reduced for pension payments before age 62 and 1 month, and unreduced for age thereafter. It also includes a Part A Early Retirement Supplement payable until age 62 and 1 month, and a Part B benefit, if you made employee contributions. The Part A Early Retirement Supplement is actually paid through the first of the month after you turn age 62. In this example, we call that date "62 and 1 month."
Suppose this participant - let's call her "Jane" - was born on April 7, 1957. She earned 32.1667 years of credited service, ending her employment on January 2, 2008.
Jane chose to receive her Part A and Part B benefits at the same retirement date, February 1, 2008, at age 50 and 10 months. Normal Retirement Age for Jane is 65, so her Normal Retirement Date is May 1, 2022. She was eligible for the 30 Year Retirement and elected the plan's benefit for married participants, which includes a 65% survivor option and "pop-up" provision for the Part A Basic Benefits. PBGC refers to this form of benefit as a "Joint and 65% Pop-Up Survivor Annuity". The Part A supplement is paid as a Straight Life Annuity. The Part B benefits are paid as a Joint and 65% Survivor Annuity without "pop-up."
Let's first consider what benefits the plan would pay if it hadn't terminated. Jane's unreduced Part A Basic Benefit is $1,593.86 per month. Jane's Part A Basic Benefit after reductions for age and form of benefit is $573.79. Jane's Part A Early retirement Supplement is $1,958.63 per month, which is payable until age 62 and 1 month.
Jane made employee contributions until she retired, so she's entitled to Part B Primary and Supplementary benefits. If she retired at age 62, Jane's Part B Primary benefit would be $685.74, and her Part B supplementary benefit would be $641.49. Since she retired early, these amounts are $267.09 and $249.75, after the plan's reductions for age and survivor coverage.
At age 62 and 1 month, Jane's Part A Basic Benefit is reduced not for age but just for the survivor coverage from $1,593.86 to $1,514.17. Jane's Part A Early Retirement Supplement is no longer payable.
Since Jane's Part B Primary and Supplementary benefits are permanently reduced, these amounts, at age 62 and 1 month, are the same as the ones we saw earlier.
By adding up the figures from the previous 4 slides, we see that the plan would have paid Jane $3,049.26 per month from her actual retirement date until age 62 and 1 month, and $2,031.01 per month after age 62 and 1 month.
Again, here are the final amounts:
Before age 62 and 1 month, Jane's Part A Basic and Part B benefits pay $1,090.63, and her supplement pays an additional benefit of $1,958.63 per month for a total benefit of $3,049.26. After age 62 and 1 month, her supplement stops, and her Part A Basic and Part B benefits pay $2,031.01 per month for the rest of her life.
