Benefit Calculations
Overview | Eligibility
| How the Plan Works | Benefit
Calculations | Payment Options
| Administrative Details
• Normal Retirement
• Accrued Pension
• Early Retirement
Normal Retirement Accrued Pension Benefit Calculation
Early Retirement Benefit Calculation Example
You are eligible to elect an early retirement benefit as early as age 55 if
you have earned five years of vesting service. Early retirement benefits are reduced
5 percent for each year you receive your benefit before your normal retirement
date. So, if you retired at age 55, your benefit would be reduced by 50 percent.
The formula used to determine your pension benefit is:
|
1.0% x final average compensation (up to ½ of the 5-year average
of the Social Security wage base) multiplied by benefit service earned after 2001 |
|
Plus |
|
1.5% x final average compensation (over the ½ of the 5-year average
of the Social Security wage base) multiplied by benefit service (to a maximum
of 35 years) earned after 2001 |
|
Plus |
|
Your accrued benefit as of December 31, 2001 under the former pension plan,
adjusted for future compensation increases. |
This benefit would then be reduced by 5 percent for each year you
receive your benefit prior to age 65.
Example
Pat is retiring at age 55. Pat has 19 years of credited service, all
with Trinity Health. Pat's final average compensation at retirement
is $2,500 and ½ of the 5-year average of the Social Security
wage base is $3,350.
Benefit calculation under new Pension Plan:
|
1.0% x $2,500 x 19 = |
$475 |
|
Number of years retiring early |
10 years |
|
100% - (10 years x 5%) |
= 50% |
To determine the benefit after the early retirement reduction, multiply the monthly
benefit by 50 percent. This gives Pat a monthly benefit of $237.50.
For more detailed calculations see:
Benefit Calculation - Former Mercy Plan
Benefit Calculation - Former HC (less than 75 points)
Benefit Calculation - Former HC (75 points or more)
Early Retirement Accrued Benefit Calculation for Former Mercy Plan
If you were participating in a former Mercy Pension Plan and had an accrued
benefit as of December 31, 2001, your accrued benefit would be included in your
pension benefit.
When calculating your early retirement pension benefit that includes an
accrued benefit, four factors must be considered:
- Your accrued benefit under the Trinity Health Pension Plan formula
- Your accrued benefit as of December 31, 2001 from former Mercy plan
- Your pay adjustment factor, equal to the ratio of your current average
compensation over your average compensation of December 31, 2001.
- The reduction amount for each year you receive the benefit before your
normal retirement date.
Example
Kelly is retiring at age 62 on July 1, 2005. She has 19 years of credited service
as of December 31, 2001 , and an additional 3.55 years of credited service after
December 31, 2001. Kelly's monthly final average compensation in 2001 was $2,700.
Her final average compensation at retirement is $3,000. One-half of the 5-year
average of the Social Security wage base is $3,350. Her accrued benefit as of
December 31, 2001 was $543.40.
|
Step 1: Determine accrued benefit under the Trinity Health Pension Plan
formula |
|
1.0% x $3,000 x 3.55= |
$106.50 |
|
Step 2: Determine the pay adjustment factor
The Pay Adjustment Factor is equal to: |
|
Final average compensation at calculation date (7/1/05) |
$3,000 |
=1.111 |
|
Final average compensation at 12/31/01 |
$2,700 |
|
Step 3: Multiply the accrued pension benefit as of 12/31/01 under the
former plan by the pay adjustment factor |
|
The accrued benefit as of December 31, 2001 was $543.40. To update this accrued
benefit for increases in the final average compensation that occur after January
1, 2002, you need to multiply this benefit by the pay adjustment factor. |
| $543.40 x 1.111 = $603.72 |
|
Step 4: Compute the total pension benefit before reduction |
|
New Accrued Benefit |
$ 106.50 |
|
12/31/01 Accrued Benefit under former Plan
(adjusted for future compensation increases)
|
+ $603.72 |
|
Total Monthly Pension Benefit |
= $710.22 |
|
Step 5: Calculate the reduction of the pension benefit |
|
Determine the number of years the benefit is received before the normal retirement
date of age 65 and multiply by 5%. |
| 3 years until normal retirement x 5% = 15% reduction of benefit
|
|
Step 6: Determine total pension benefit |
|
Multiply the amount in Step 5 by the benefit reduction percentage. |
| $710.22 x 85% = $603.69 |
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Early Retirement Accrued Benefit Calculation for Former
Holy Cross
(less than 75 points)
If you were participating in a Holy Cross Pension Plan and had a prior pension
benefit as of December 31, 2001, your prior pension benefit would be included
in your pension benefit under the Trinity Health Pension Plan.
When calculating your early retirement pension benefit that includes a
prior pension benefit, four factors must be considered:
- Your accrued pension benefit under the new formula
- Your accrued pension benefit as of December 31, 2001 from
the Holy Cross plan
- Your pay adjustment factor.
- The reduction amount for each year you receive the benefit
before your normal retirement date.
Example
Sharon is retiring at age 60 on July 1, 2005. Sharon has 10 years of credited
service as of December 31, 2001, and an additional 3.55 years of credited service
after December 31, 2001. Sharon's monthly final average compensation in 2001 was
$2,700. Her final average compensation at retirement is $3,000. One-half of the
5-year average of the Social Security wage base is $3,350 in 2005. Her accrued
pension benefit as of December 31, 2001 was $318.09.
| Step 1: Determine accrued benefit under
the Trinity Health Pension Plan formula |
| 1.0% x $3,000 x 3.55= |
$106.50 |
Step 2: Determine the
pay adjustment factor
The Pay Adjustment Factor is equal to: |
| Final average compensation at calculation
date (7/1/05) |
$3,000 |
=1.111 |
| Final average compensation at 12/31/01 |
$2,700 |
| Step 3: Multiply the prior accrued
benefit by the pay adjustment factor |
| The accrued benefit as of December 31, 2001 was $318.09.
To update this accrued benefit for increases in the final average compensation
that occur after January 1, 2001, you need to multiply this benefit by the pay
adjustment factor. |
| $318.09 x 1.111 = $353.40 |
| Step 4: Compute the Total Pension Benefit
before reduction |
| New Accrued Benefit |
$ 106.50 |
12/31/01 Accrued Benefit under former Plan
(adjusted for future compensation increases)
|
+ $353.40 |
| Total Monthly Pension Benefit |
= $459.90 |
| Step 5: Calculate the reduction
of the pension benefit |
| Determine the number of years the benefit is received
before the normal retirement date of age 65 and multiply by 5%. |
| 5 years until normal retirement x 5% = 25% reduction of benefit |
| Step 6: Determine total pension
benefit |
| Multiply the amount in Step 5 by the benefit reduction
percentage |
| $459.90 x 75% = $344.93 |
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Early Retirement Accrued Benefit Calculation for Former
Holy Cross
(75 points or greater)
If you were participating in a former HC Pension Plan and had a prior pension
benefit as of December 31, 2001, your prior pension benefit would be included
in your Trinity Health Pension Plan benefit. You would also be eligible for the
special early retirement feature (75 points) on your prior pension benefit.
When calculating your pension benefit that includes an accrued benefit, seven
factors must be considered:
- Your accrued pension benefit under the Trinity Health Pension
Plan formula
- Your accrued pension benefit as of December 31, 2001 from
former Holy Cross plans
- Your pay adjustment factor, equal to the ratio of your
current average compensation over your average compensation at
December 31, 2001
- The reduction amount for each year you receive the benefit
before your normal retirement date
- The "base" portion of your accrued benefit
as of December 31, 2001 from the former HC plan,
eligible for unreduced early retirement benefits
- The "excess" portion of your accrued benefit
as of December 31, 2001 from the former HC plan that is not
eligible for unreduced benefits.
Your benefit would equal the greater of the early retirement reduction benefit
under the Trinity Health Pension Plan formula or the early retirement reduction
under the HC grandfathered formula.
Example
Whitney is retiring at age 55 on July 1, 2005. Whitney has 17 years of credited
service as of 12/31/01, and an additional 3.55 years of credited service after
December 31, 2001. Whitney's monthly final average compensation in 2001 was $3,000
and in 2005 it is $3,500. One-half of the 5-year average of the Social Security
wage base is $3,350 in 2005. Her pension benefit as of December 31, 2001 was $626.43.
| Step 1: Determine accrued benefit under
the Trinity Health Pension Plan formula |
| 1.0% x $3,350 x 3.55= |
$118.93 |
| 1.5% x ($3,500 - $3,350) x 3.55 = |
+ $7.99 |
| Total Monthly Benefit |
= $126.92 |
Step 2: Determine the
pay adjustment factor
The Pay Adjustment Factor is equal to: |
| Final average compensation at calculation
date (7/1/05) |
$3,500 |
=1.167 |
| Final average compensation at 12/31/01 |
$3,000 |
| Step 3: Multiply the accrued pension
benefit as of 12/31/01 by the pay adjustment factor |
| The prior accrued benefit was $626.43. To update the
prior accrued benefit for increases in the final average compensation that occur
after January 1, 2002, you need to multiply the prior benefit by the pay adjustment
factor. |
| $626.43 x 1.167 = $731.04 |
| Step 4: Subtract base portion of
your Holy Cross accrued benefit from the total benefit |
| The total benefit is both the benefit earned under the
Trinity Health Pension Plan formula and the prior pension benefit from the HC
plan $857.96. ($731.04 + $126.92 ) The base portion of the former HC accrued benefit
is $535.50. (1.05% x 3,000 x 17). |
$857.96 - $535.50 = $322.46
= remainder of your accrued benefit that is reduced for early
retirement
|
| Step 5: Calculate the reduction
of the pension benefit |
| Determine the number of years the benefit is received
before the normal retirement date of age 65 and multiply by 5%. |
| 10 years until normal retirement x 5% = 50% reduction of benefit |
| Step 6: Determine total pension
benefit (new formula) |
| Multiply the remainder (amount in Step 4) by the benefit
reduction percentage and add the unreduced former Holy Cross benefit. |
| Remainder Subject to 5% Per Year Reduction
($322.46 x 50%) |
$161.23 |
| 75 Points Unreduced Portion |
+ $535.50 |
| Total Early Retirement Benefit |
= $696.73 |
|
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