Sheet Metal Workers' International Association
Local Union No.73
Pension Welfare and Annuity Funds
How Will My Benefits Be Paid If I Die AFTER Retiring with a Pension?
What Is the Husband-and-Wife Pension?
How Is the Husband-and-Wife Pension Calculated?
Are There Rules for Payment of the Husband-and-Wife Pension?
What is the 75% Joint and Survivor Option?
How Is the 75% Joint and Survivor Option Calculated?
What Is the 100% Joint and Survivor Option?
How Is the 100% Joint and Survivor Option Calculated?
What Is the 60-Month Guarantee?
What Is the Partial Lump Sum Option?
What Is the Level Income (Social Security) Option?
How Can I Make A Decision about the Form of Payment I Would Like to Receive ?
How Will My Benefits Be Paid If I Die AFTER Retiring with a Pension?
After you are determined to be eligible for a pension from the plan, you will have to decide in what form you would like your pension to be paid. If you are married, your pension will be paid as a 50% Husband-and-Wife Pension; however, there are a number of other forms of payment, most of which were recently added by the Trustees. In addition to the 50% husband-and-Wife Option there are:
- a 75% Husband-and-Wife Option
- a 100% Husband-and-Wife Option
- a 60-Month Guarantee
- a Level Income (Social Security) Option with a 50% Husband-and-Wife Pension
- a Partial Lump Sum Option with a 50% Husband-and-Wife Pension
- a Level Income (Social Security) Option with a 60-Month Guarantee
- a Partial Lump Sum Option with a 60-Month Guarantee
If you are unmarried, your pension will be paid as a 60-Month Guarantee; however, you can also elect the following optional forms of payment:
- a Level Income (Social Security) Option with a 60-Month Guarantee
- a Partial Lump Sum Option with a 60-Month Guarantee
What Is the Husband-and-Wife Pension?
If you are married when you retire, your pension benefit is automatically payable in the form of a Husband-and-Wife Pension unless you reject this form of payment, your spouse consents to the rejection, and the rejection (with spousal consent) is witnessed by a notary public. This benefit provides a reduced monthly benefit for you so that, upon your death, your spouse will receive 50% of the benefit you were receiving. Your spouse will receive that monthly benefit for the rest of her life if she meets the rules for payment of the Husband and Wife Pension.
How Is the Husband-and-Wife Pension Calculated?
Your monthly pension benefit will be actuarially reduced taking into consideration the difference between your age and your spouse’s age. The factor applied to your single-life benefit is calculated by starting with 90% for any pension (except a Disability Pension), or 82% for a Disability Pension, and either adding .4% for each full year that the spouse is older than the retiree or subtracting .4% for each full year that the spouse is younger than the retiree on the annuity starting date of the pension.
For example, you retire at age 62 and are eligible for a Regular Pension of $1,500.00 per month and your wife is age 60. The factor would be 89.2% (90% - .8%) based on a spouse who is 2 years younger. Therefore, the monthly Husband-and-Wife Pension would be $1,338.00 ($1,500.00 x 89.2% = $1,338.00). This amount is payable to you for your lifetime. If your wife is living at the time of your death, she will receive a monthly benefit of half this amount, or $669.00, for the remainder of her lifetime.
The actuarial factors are shown on the following table for participants with a spouse from 1 to 10 years younger or older.
with Participant’s Age
Husband-and-Wife Pension1 year younger
2
3
4
5
6
7
8
9
10 years younger
89.2%
88.8%
88.4%
88.0%
87.6%
87.2%
86.8%
86.4%
86.0%
81.2%
80.8%
80.4%
80.0%
79.6%
79.2%
78.8%
78.4%
78.0%Same age
1 year older
2
3
4
5
6
7
8
9
10 years older
90.4%
90.8%
91.2%
91.6%
92.0%
92.4%
92.8%
93.2%
93.6%
94.0%
82.4%
82.8%
83.2%
83.6%
84.0%
84.4%
84.8%
85.2%
85.6%
86.0%
Are There Rules for Payment of the Husband-and-Wife Pension?
Yes. They are as follows:
- The spouse must have been legally married to the pensioner on the annuity starting date of the pension and for at least one year before the pensioner’s death.
- If the spouse dies before the pensioner, the amount of the pensioner’s monthly benefit is not increased because the spouse died. No other spouse may become eligible for the Husband and Wife Pension.
- If the spouse and pensioner divorce, the pensioner may not have his monthly pension increased.
- The Plan, in accordance with the law, must recognize a qualified domestic relations order.
For more information regarding these orders, see the section of this summary entitled “What Is a Qualified Domestic Relations Order?”
What is the 75% Joint and Survivor Option?
If you retire on or after April 1, 1996, and you are married, you can elect a Joint and 75% Survivor Option. This benefit provides a reduced monthly benefit for you so that, upon your death, your spouse will receive 75% of the benefit that you were receiving for the rest of his or her life. The rules for payment of the 75% Joint and Survivor Option are stated below.
How Is the 75% Joint and Survivor Option Calculated?
Your monthly benefit will be actuarially reduced taking into consideration the difference in your age and your spouse’s age. For most retiring participants, the reduction factor is calculated by starting with 85.5% and adding 0.6% for each year that you are younger than your spouse or subtracting 0.6% for each year
that you are older than your spouse. For participants retiring on a Disability Pension, the reduction factor is calculated by starting with 74.5% and adding 0.5% for each year that you are younger than your spouse or subtracting 0.5% for each year that you are older than your spouse.
For example, you retire at age 62, are eligible for a Regular Pension of $1,500.00, and you and your spouse elect the 75% Joint and Survivor Option. Your spouse’s age is 59. The reduction factor would be 83.7% based on a spouse who is 3 years younger. Therefore the 75% Joint and Survivor Option would be $1,255.50 ($1,500.00 x 0.837 = $1,255.50). This amount is payable to you for your lifetime. If your spouse is living at the time of your death, she will receive a monthly benefit of $942.00 ($1,255.50 x 0.75 = $941.63, rounded to $942.00) for the remainder of her lifetime.
with Participant’s Age
75% Joint and Survivor Option10 years older
9
8
7
6
5
4
3
2
1 year older
90.9%
90.3%
89.7%
89.1%
88.5%
87.9%
87.3%
86.7%
86.1%
79.0%
78.5%
78.0%
77.5%
77.0%
76.5%
76.0%
75.5%
75.0%Same age
1 year younger
2
3
4
5
6
7
8
9
10 years younger
84.9%
84.3%
83.7%
83.1%
82.5%
81.9%
81.3%
80.7%
80.1%
79.5%
74.0%
73.5%
73.0%
72.5%
72.0%
71.5%
71.0%
70.5%
70.0%
69.5%
Payment of the 75% Joint and Survivor Option is subject to the following conditions:
- the 75% Joint and Survivor Option can be elected only prior to approval of your pension application by the Trustees;
- Once the 75% Joint and Survivor Option is approved by the Board of Trustees, it cannot be revoked; and
- The 75% Joint and Survivor Option may not be elected with the 60-Month Guarantee or any other optional form of payment available under the Plan.
What Is the 100% Joint and Survivor Option?
If you retire on or after April 1, 1996, and you are married, you can elect a 100% Joint and Survivor Option. This benefit provides a reduced monthly benefit for you so that, upon your death, your spouse will receive 100% of the benefit that you were receiving for the rest of his or her life. The rules for payment of the 100% Joint and 100% Survivor Option are stated below.
How Is the 100% Joint and Survivor Option Calculated?
Your monthly benefit will be actuarially reduced taking into consideration the difference in your age and your spouse’s age. For most retiring participants, the reduction factor is calculated by starting with 81% and adding 0.7% for each year that you are younger than your spouse or subtracting 0.7% for each year that you are older than your spouse. For participants retiring on a Disability Pension, the reduction factor is calculated by starting with 67.0% and adding 0.5% for each year that you are younger than your spouse or subtracting 0.5% for each year that you are older than your spouse.
For example, you retire at age 62, are eligible for a Regular Pension of $1,500.00, and you and your spouse elect the 100% Joint and Survivor Option. Your spouse’s age is 57. The reduction factor would be 77.5% based on a spouse who is 5 years younger. Therefore the 100% Joint and Survivor Option would be $1,162.50 ($1,500.00 x 0.775 = $1,162.50). This amount is payable to you for your lifetime. If your spouse is living at the time of your death, she will receive a monthly benefit of $1,162.50 for the remainder of her lifetime.
The actuarial reduction factors are shown on the following table for participants with a spouse from either one (1) to ten (10) years older or one (1) to ten (10) years younger.
Compared with
Participant’s Age
100% Joint
and Survivor Option
Compared with
Participant’s Age
Factor for 100%
Joint and Survivor Option10 years older
9
8
7
6
5
4
3
2
1 year older
Same age
87.3%
86.6%
85.9%
85.2%
84.5%
83.8%
83.1%
82.4%
81.7%
81.0%
71.5%
71.0%
70.5%
70.0%
69.5%
69.0%
68.5%
68.0%
67.5%
67.0%1 year younger
2
3
4
5
6
7
8
9
10 years younger
80.3%
79.6%
78.9%
78.2%
77.5%
76.8%
76.1%
75.4%
74.7%
74.0%
66.5%
66.0%
65.5%
65.0%
64.5%
64.0%
63.5%
63.0%
62.5%
62.0%
Payment of the 100% Joint and Survivor Option is subject to the following conditions:
- the 100% Joint and Survivor Option can be elected only prior to approval of your pension application by the Trustees;
- Once the 100% Joint and Survivor Option is approved by the Board of Trustees, it cannot be revoked; and
- The 100% Joint and Survivor Option may not be elected with the 60-Month Guarantee described below or any other optional form of payment available under the Plan.
What Is the 60-Month Guarantee?
For deaths on or after May 1, 1996, if you are married and you and your spouse reject the 50% Husband and Wife Pension (or the 75% or 100% Joint and Survivor Pension) or if you are unmarried, your benefit will be paid for your life with a 60-month guarantee. If you die before receiving 60 monthly pension payments, your spouse or designated beneficiary (if you are unmarried) will receive your monthly benefit until 60 payments, including the payments to you, have been made.
If your spouse or designated beneficiary also dies before a total of $1,500 in monthly pension payments has been paid to your spouse or designated beneficiary, the difference between the amount of payments actually made and $1,500 will be paid as a lump sum to the beneficiary designated by the Pensioner’s designated Beneficiary.
There were different rules for participants who died prior to May 1, 1996. Under these rules, the 60 month guarantee was only payable to the surviving spouse of a married pensioner. You could not designate a beneficiary.
What Is the Partial Lump Sum Option?
Effective for retirements on or after April 1, 1996, you may elect to have the amount of your monthly benefit reduced by not more than 10% in return for payment to you of a lump sum of money at the time your monthly pension is first payable. This option shall only be available to participants who retire and are eligible for a monthly benefit of $100 or more per month.
Payment of the Partial Lump Sum Payment Option is subject to the following conditions:
- You must elect to have your monthly benefit reduced by an even dollar amount which does not exceed 10% of the monthly benefit. The minimum lump sum payable is not less than $500. The maximum lump sum payable is $20,000.
- The Partial Lump Sum Payment Option can be elected only prior to the approval of your pension application by the Trustees. Thereafter, you may not elect a Partial Lump Sum Payment, even following subsequent reemployment.
- Once the Partial Lump Sum Payment Option is approved by the Board of Trustees, it cannot be revoked.
- The Partial Lump Sum Payment Option may not be elected in connection with the 50% Husband-and-Wife Pension unless the Participant and Spouse provide written consent. If the 50% Husband-and-Wife Pension is elected, the amount of the 50% Husband and Wife Pension will be computed after adjustment for the Partial Lump Sum Payment.
- The Partial Lump Sum Payment may not be elected in connection with the Level Income Option or the 75% or 100% Joint and Survivor Option.
- Only one Partial Lump Sum Payment will be awarded during your lifetime.
EXAMPLE: Mike, a married participant, retires at age 62 and is eligible for a Regular Pension of $1,400.00 per month. He elects the Partial Lump Sum Option (with the consent of his spouse) and chooses to reduce his pension dollar amount by the maximum 10% allowed. In this case, Mike’s reduction in his monthly pension equals $140.00 per
month. On the effective date of his pension, Mike receives a lump-sum payment of $16,911.33 (as determined by the Fund Office) and his monthly pension of $1,260.00 ($1,400.00 minus $140.00 equals $1,260.00).
If Mike and his spouse wish to receive the remainder of his pension as a 50% Husband-and-Wife Pension, the $1,260.00 monthly benefit described above would be reduced. Assuming that Mike’s spouse is the same age as Mike (age 62), the monthly
benefit would be $1,134.00 (90% of $1,260.00). Upon Mike’s death, his surviving spouse will receive $567.00 per month (50% of $1,134.00) for life.
The amount of the Partial Lump Sum payment is based on factors determined by the Fund’s actuary. These factors change each year on July 1 based on interest rates required to be used by federal law to calculate lump sum payments.
The lump sum payments shown above are determined on a before-tax basis. The rules regarding taxation of a lump sum distribution are very complex. You may wish to consult a tax advisor prior to electing this option.
What Is the Level Income (Social Security) Option?
Effective for retirements on and after April 1, 1996, if you have not yet reached your unreduced Social Security Retirement Age you may elect the Level Income Option and have your pension from the Plan increased until age 62 or your unreduced Social Security Retirement Age, according to the age at which you expect to receive your Social Security benefit, and reduced thereafter, in order to approximate a pension before age 62 or your unreduced Social Security Retirement Age as nearly equal as possible to your combined retirement income after that age.
- If you retire under the Level Income Option, you must request from the Social Security Administration the amount of the retirement benefit which Social Security expects to pay you at age 62 or your unreduced Social Security Retirement Age (which varies, depending on your date of birth and can be 65, 66 or 67). You must file with the Fund Office a copy of the report of the Social Security retirement benefit you expect to receive at age 62 or your unreduced Social Security Retirement Age, whichever you elect, and the Trustees shall rely on the reported Social Security benefit amount in calculating the pension amounts to be paid from the Plan.
Once payment under the Level Income Option is approved by the Trustees, there shall be no changes in the amounts of the monthly benefits paid by the Plan, regardless of the amount paid by Social Security.
- Pensions payable in the Level Income Option form will be adjusted based on factors determined by the Fund’s actuary. These factors change each year on July 1 based on interest rates required to be used by federal law.
If you elect the Level Income Option, your estimated Social Security benefit will be multiplied by an actuarial factor which corresponds to your age on the Annuity Starting Date. The resulting amount will be the amount from the Plan by which the monthly pension amount you would otherwise receive is increased. Payment of this higher monthly amount will be made until the first of the month in which you reach age 62 (or your unreduced Social Security Retirement Age), at which time the monthly amount you are receiving from this Plan will be reduced by the estimated Social Security Benefit at age 62 used in the original pension calculation.
- Payment of the Level Income Option is subject to the following conditions:
- The Level Income Option can be elected only prior to the approval of your pension application by the Trustees. Thereafter, you may not elect a Level Income Option, even following subsequent reemployment.
- Once the Level Income Option is approved by the Board of Trustees, it cannot be revoked.
- If the adjustment described above would reduce the monthly amount payable after age 62 or your unreduced Social Security Retirement Age to less than $25 a month, you cannot elect this option.
- The Level Income Option may not be elected in connection with the Partial Lump Sum Option or the 75% or 100% Joint and Survivor Option.
- The Level Income Option may not be elected or received in connection with the Disability Pension benefit of the Plan.
- The amount of benefits for a Participant whose benefit is paid as a Husband-and-Wife Pension in the Level Income Option form shall be determined as follows:
- Determine the monthly amount of the pension without adjustment for the Husband-and-Wife Pension or the Level Income Option form of payment.
- Adjust the amount in paragraph above to the amount payable as a Husband-and-Wife Pension.
- Adjust the amount payable to the Participant in subparagraph above to the Level Income Option amounts to be paid in accordance with this section.
- Upon the death of the Participant, if the Spouse eligible for the Husband-and-Wife Pension survives, the Spouse will receive 50% of the amount payable prior to adjustment for the Level Income Option.
If you want your pension paid under the Level Income Option, you must file an application with the Fund Office. In addition, you must contact the nearest area office of the Social Security Administration to get an estimate of your Social Security benefits at age 62 or your unreduced Social Security Retirement Age, depending on when you expect to begin receiving your benefit. The Social Security Administration will need to know your Social Security number and your current earnings. The Board of Trustees will rely on the estimate reported by the Social Security Administration. Once payment under the Level Income Option is approved by the Board of Trustees, there will be no changes in the amount of the monthly benefit paid by the Plan, regardless of the amount actually paid by Social Security.
If the amount of the Level Income Option payable after your Social Security payments start would be less than $25 per month, you may not choose this form of payment.
EXAMPLE: Jim, an unmarried participant, is retiring at age 60 and is entitled to a pension of $1,500.00 a month for life from the Fund. At age 62, Jim will be entitled to a Social Security benefit of $1,100.00 per month.
Under the Level Income Option, Jim will be paid a benefit of $2,402.88, rounded to $2,403.00 per month from the Fund until he reaches age 62 and then a benefit of $1,303.00 per month for life after age 62 (instead of the $1,500 per month that he would have received as a single life benefit beginning at age 60 and payable for life). When the lower pension amount becomes payable at age 62, Jim will continue to
receive $2,403.00 per month ($1,303.00 from the Fund and $1,100.00 from Social Security).
Please note that, if you are married, you can elect this option and also elect the 50% Husband-and-Wife Pension. In the prior example, if Jim were married and he and his wife were both age 60, his monthly benefit before age 62 would be $2,252.88, rounded to $2,253.00 and his monthly benefit beginning at age 62 would be $1,153.00. Upon his death, his spouse will receive one-half of the $1,350 (90% reduction for the 50% Husband-and-Wife Pension x $1,500 = 1,350) Jim would have received as a regular 50% Husband-and-Wife Pension, or $675.00, for the remainder of her lifetime.You cannot elect this option in connection with any other optional form of benefit payable under the Plan.
The amount of the Level Income Option payments is based on factors determined by the Fund’s actuary. These factors are re-determined every July 1.
How Can I Make A Decision about the Form of Payment I Would Like to Receive ?
When you apply for your benefits, the Fund Office will provide you with estimates of your benefit payable in the different forms available under the Plan.
You will have until the effective date of your pension or, if later, 30 days after the date of the estimate to decide whether or not you want your pension paid as a Husband-and-Wife Pension. Please note that you can waive the 30 day “waiting period” described above with your spouse’s consent and can begin receiving your pension benefits after only a seven day waiting period.
You can make a choice or change a previous election by completing, signing, and returning the election form to the Fund Office within the period described. In no event can the election be changed after the later of the effective date of your pension or 30 days from the date of the written estimate.
You should also note that if you and your spouse wish to reject the Husband-and-Wife Pension, the rejection cannot be made more than 90 days before the effective date of your pension.
