As a result the company argues the former employees do not qualify to receive early retirement benefit
which has more enhanced benefits than a simple cash withdrawal benefit.
Eliminate provisions that allow an employee with a minimum of 20 years' service to receive an early retirement benefit
of one-third of the average of their highest three earning years, if they are fired for no fault of their own.
In addition, if at the time of the conversion, any of your participants have met the age, years of service, and other requirements for an early retirement benefit
or a retirement subsidy, then the value of these benefits must be recognized in calculating the participant's benefits under the plan.
Regardless of which benefit is chosen, the surviving spouse will be dependent on that single benefit payment, already reduced for the early retirement benefit
election, for the rest of his or her life.
The case involved the plan's unreduced early retirement benefit
, which, under the plan terms, was suspended for pensioners who returned to "disqualifying employment.
If a worker chooses to retire on his 62nd birthday in the next calendar year, his early retirement benefit
will be approximately 1 percent less each month than someone who retired on his 62nd birthday in 1999.
A plan amendment that retroactively (i) eliminates or reduces an early retirement benefit
or a retirement-type subsidy (as defined in regulations), or (ii) eliminates an optional form of benefit is treated as reducing accrued benefits.
Practitioners should determine whether it is better to use an early retirement benefit
or a normal unreduced pension benefit for valuation.
As technology improves, companies could require that retirees leave behind a knowledge legacy as a quid pro quo for the early retirement benefit
For example, one way to modify program guarantees is to phase-in certain unfunded benefits, such as "shutdown benefits," which may provide significant early retirement benefit
subsidies to participants affected by a plant closing or a permanent layoff.
Take-Aways"--Unless a retiree had at least 30 years of service, the early retirement benefit
in the Tobacco plan was presented as a reduction of the age-65 benefit.
A plan amendment that has the effect of eliminating or reducing an early retirement benefit
or a retirement-type subsidy, or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment, is treated as reducing accrued benefits.