Words: 1521
The employee can contribute up to 6% of each pay period. This plan will not integrate with any government benefits. You must be vested to receive benefits. You must have one year of full service under Tundra employment and be a part of Tundra by July, 2015. Once you are vested there are no age requirements. For normal retirement and to receive full payment you must be age 60 with 15 years of service with the company. For early retirement, you must have 10 years of service at any age but your benefit will be lowered by 20%.
Employees will receive a 2. 5% career average plan as benefits for retirement. Maximum abominable earnings shall be deemed equal to 70% of last lull calendar year of service for the company. Plan B- Non Negotiated Type of pension plan would be defined benefit. Career average pension plan, which will be set at 2% of each year under the arrangements of the pension plan. Employees will contribute 5% of each pay period which is required. This plan will integrate government benefits as it will not be taxed when payment is received.
Eligibility for this plan is you must be hired by Tundra by July,2015 or receive 1 year of full time work on the job at Tundra. After you receive vesting requirements age will not be a requirement to receive rights. Normal retirement GE is 65 for this plan. You must have 20 years of experience once you hit the age of 65 to receive full benefits. To receive early retirement you must have 15 years of experience at Tundra and your pension plan will be lowered to 1% of each year worked. Your benefits after retirement will be given out annually for the first 5 years.
So you will earn 2% of what you made for the first 5 years at Tundra and then you can choose to take out all your benefits at once after 5 years. You may also choose to keep the benefits coming annually as well. These were both good, in that you seemed to put the design into your own words. You just need to justify why the provisions were different between the plans because it’s not clear why you chose each one. Question 2 A) Defined benefit plans are attractive to employees because they protect them from interest rates pr changes in asset values.
They also make sure that retirement income will have a similarity to income they earned while still working. Defined benefit plans also do a better job of protecting against inflation and provide other retirement related benefits. These plans can also present risks for sponsoring employers. These risks with the defined benefit plan our greater Han the risks with the defined contribution plans. What are these risks? Also contributions made by employers might be actually smaller then they are to defined benefit plans. B) Public policy should promote and try to protect defined benefit plans as mulch as possible.
Unionized workers who usually who these plans usually cover have more rights than non union members. Also this is more the public sector which can have other retirement benefits. Changes in public policy or legislation could help make defined benefit plans more attractive. By the government stepping in to take some of the risk of employers would be a age step for these types of plans. If the employer didn’t feel this plan was more of a risk these would be more an ideal plan for employees. Why do you feel that they should be protected though? What rights do you mean regarding union members?
And do you mean to say that those rights are related to the DB plan? C) Yes indexation should be legislatively required for all defined benefit plans. This would help protect pensioners to receive full protection under the terms of their plan. Right now only 17% of all members are fully protected. 35% are partially protected so having it the same for everyone would be a step in the eight direction. (in the future on your assignments, please cite/reference where you retrieved information like this, anything that isn’t common knowledge has to be cited).
This would give employees more benefits and employers a even playing field to recruiting and how they treat pensioners. Collective bargaining is the right way to go and can be avoided by legislatively. (sentence unclear – is collective bargaining the way to go because it’s good, and if so, why do you think it should be avoided? ) This way inflation can have a set standard and people are not getting taken advantage of by sponsors. What argument would you UT forward to the idea that indexing might be costly for employers?
Question 3 Please identify which plan you used just to be clear during grading. A) The pension formula is below. Member’s Final Average Earnings and years of Credited Service to his or her actual retirement date, and unreduced if the Member’s age at retirement is at least age 60, but reduced by . 75% per month to a maximum of 60 months, by which his pension commencement date precedes his or her attainment of age 60 and further reduced by . 5% per month by which his or her pension commencement date precedes his or her attainment of age 55; and 1. Of that portion of the Members Final Average Earnings, determined at normal retirement date, which does not exceed the average of the Year’s Maximum Abominable Earnings for those years; 1. 9% of that portion of the Member’s Final Average Earnings, determined at normal retirement date, which exceeds the average of the Year’s Maximum Abominable Earnings for those years; multiplied by the number of years (completed days as a fraction) of Credited Service as at normal retirement date. Maximum allowed is $1722. 22 or such greater amount permitted under the income tax act. % of the average of the member’s earnings from the university in his/her three highest years of earning. It is a contributory plan and members do have to make a contribution. This includes payroll deductions each pay period. B) YMMV is utilized in the pension formula by decreasing payment by . 75% each month. Also setting the maximum at $1722. 22 or such greater amount permitted under the income tax act. 1. 4% of the portion of the members final average earning that does not exceed the Year’s Maximum abominable earnings. /35th of 25% of the average of the Y MME for the year of retirement and each of the 2 immediately preceding years, multiplied by the mentionable service of the Member after December 31 , 1991, not exceeding 35 years. C) Yes this plan does integrate the Canada Pension Plan. Year’s Maximum Abominable Earnings shall have the meaning given to these words by the Canada Pension Plan for all years after January 1, 1966, and for years preceding that date shall be deemed to be $5,000. It is used in the formula by only allowing the years maximum abominable earnings defined by the CAP.
The integration of the CAP actually decreased contributions and had an adjustment of benefits. Can you explain further how this happens? D) Yes this plan has a bridge benefit. It is an annual bridging benefit payable in equal monthly installments in the amount equal to 1. 25% of 1993 annulled basic Earnings per year of Credited Service in excess of 7 years of Credited Service. Plus 0. 5% of 1993 annulled basic Earnings per year of Credited Service not exceeding 7 years of Credited Service.
E) Yes a defined contribution component is mentioned in this document. There is a contribution by both the employee and employer. It is integrated with the defined benefit component by that money will be payable under the defined benefit of the provision of the plan. F) The plans definition of earnings is for NY period means the amount of cash remuneration in respect of employment, other than honoraria, payments for overload teaching and TO Other Earnings, as determined by the University for the purposes of the Plan.
The plans definition of abominable service Credited Service means, with respect to each Member, the period of Credited Service, if any, to his or her credit as of June 30, 1971, plus the total number of years and fractions of years of Continuous Service after June 30. G) Yea I agree with the plans definition of abominable service and earnings. Would add more to abominable service to make employees work harder and eve them more motivation to help the university. H) I would need to work until am 55 to receive full unreduced pension.
I am 22 now so that would be another 23 years of full service. L) Normal form of pension is the benefits, if any, an employee’s beneficiary or estate will receive when the employee dies after retirement. The normal form of pension under this Plan for a Member who does not have an Eligible Spouse at the date of pension commencement is one which commences on the Members retirement date, continues in monthly installments for his or her lifetime and ceases with the payment due in the month in which the Member dies.