Post Retirement Work – Changes You Should Know

A recent review of the Plan regulations and modifications in the software for Fund computers dictated that a thorough review of protocols including post-retirement benefit adjustment procedures be reviewed. To limit any complications due to possible changes in rules or procedure, adjustments for post-retirement work in 2014 were placed on hold until the Board of Trustees could fully assess the matter.  At the September meeting of the Board of Trustees, policy recommendations were presented to and approved by the Board.   As a result, changes in the process for benefit adjustments for post-retirement work were implemented.  If you plan to retire, or have already, and return to work, please familiarize yourself with these changes.

freedigitalphotos.netThe Trustees must ensure that the pension plan remains in compliance with IRS rules for tax-exemption. A recent IRS ruling clearly prohibited early retirement benefits to individuals who do not actually “retire,” which means leaving work for the contributing employer with no intention to return to work, and led the Plan to review its procedures from the ground up to ensure compliance with IRS rules.  The Plan must also follow its Funding Improvement Plan and the legal limitations on benefit increases during its Funding Improvement Period to improve the Plan’s funding for the benefit of all participants.

Pay and Offset.  After reviewing various legal and operational issues, the Trustees clarified the plan and adopted a uniform “pay and offset” rule, which legally can be applied for post-retirement work at all ages.  If you return to work in 2016 or later after retirement without a suspension of benefits, pension benefit accruals for your additional work under a waiver will be calculated under this rule.

When the Plan pays benefits under a waiver of suspension, it pays out money that it is not legally required to pay and reduces plan assets for other participants that are only partially restored by new contributions. There are reasons to allow waivers when workers are needed, but the “pay and offset” method allows the Plan to take account of the extra payments by comparing the retirement benefits received while working under a waiver each year to the actuarial lump sum value of any benefit your additional work may earn for that year.  If the retirement benefits you receive are greater than the value of the benefits otherwise earned for your additional work, you will not receive an additional benefit adjustment to your retirement benefit amount.  If you work under a waiver, you still receive the benefit of wages in addition to pension benefits.

Recalculation and Payment Dates. If you retire under Early Retirement, any additional benefits earned for your work after retirement will only be calculated and paid to you once you reach age 65 or, if later, stop suspendible work in the IUPAT trades. The Fund office will review post-retirement work at age 65, but, if you work after age 65, you will need to notify the Fund office in writing when you stop work to start payment of additional benefits.  Once you reach age 65, you will be eligible to make a new benefit election for the payment form of any post-retirement benefit accruals due to you for your post-retirement work and any later work after Normal Retirement Age.

After Normal Retirement Age (normally, age 65), additional benefits for post-retirement work will only be paid once you stop working in the IUPAT trades and so notify the Fund office.  Any additional benefits will be recalculated for each year you worked under the “pay-and-offset” method and be paid in the same form of payment as you elected at or after age 65 – normal retirement age.

If you are still working at your mandatory payment date (April 1 after the year you turn age 70 ½), the Plan will automatically begin payment of the benefits you earned to that date.  It will then recalculate and pay any additional benefits under the “pay-and-offset” method in each succeeding year.

For individuals who worked after retirement and before the implementation of the recent change approved by the Board of Trustees, the Fund office will conduct reviews for any additional benefits due and will advise these individuals of adjustments in their benefits. This process is hoped to be completed by April of 2016.