Pension Death Benefit

[JABORD]

Two points for topic.
First is the Survivor Benefit for the Pension that we will be paying for. The benefit addresses how our pension will be paid out to our spouses if we were to die while still actively working with AA. The benefits default setting has been set by AA at the minimum by law of 50%. Very important to understand that what that means is if your die while still working at AA, the company will payout your pension to your wife/husband at the age that you would have been eligible at 1/2 of the amount you would have received, and take back 1/2. Again, this regards if we die before retireing. Hope to not have lost you, but the thing I'll point out is that you have the option to file a form, 'Enhanced Survivor Annuity ' form to require AA to pay your spouse the full (100%) amount of what you have earned. Again, this pertains to how your pension would be paid out to your spouse if you died before you retire. Does not apply to single members.

Now my question for anyone that might know, does this pre-retirement pension death benefit still apply if frozen by AA or administered by the PBGC?

 

[jimntx]

I think one of the US Airways people has already answered this in another thread. IIRC, the poster said that he elected a smaller monthly annuity from the PBGC so that his wife would get an annuity for her lifetime.

I just found it on the PBGC website. Yes, there is a joint and survivors option.


PBGC Annuity Options (Then, click on My Benefit Options.)

 

[JABORD]

I think one of the US Airways people has already answered this in another thread. IIRC, the poster said that he elected a smaller monthly annuity from the PBGC so that his wife would get an annuity for her lifetime.

I just found it on the PBGC website. Yes, there is a joint and survivors option.


PBGC Annuity Options (Then, click on My Benefit Options.)

Please take note, yes there most likely is a POST (after you enter retirement) option to leave to your spouse. What I have posted about is PRE (you were to die BEFORE you leave AA). One reason I began this topic is because some folks will now be forced to work longer to provide better medical benefits.

 

[BoeingBoy]

You asked about frozen and terminated pensions and the answer isn't the same. If the pension is frozen with no other changes, the terms of the pension still apply - the amount of the pension benefit just stops increasing at the time it's frozen. All that happens is that accrual of benefits stops. If the pension is terminated, it's taken over by the PBGC and their rules apply. Depending on how many choices you had for calculating the benefit while the plan was in effect, you may or may not be more limited in withdrawal options. The PBGC does not have any lump sum options, I believe without checking 2 spousal options (50% and 100%), term certain, and life benefits. I also believe that if a spousal benefit is chosen it applies if the employee dies prior to retirement although the benefit is based on the age of the employee when he/she dies instead of normal retirement age.

Jim

 

[tom barry]

You asked about frozen and terminated pensions and the answer isn't the same. If the pension is frozen with no other changes, the terms of the pension still apply - the amount of the pension benefit just stops increasing at the time it's frozen. All that happens is that accrual of benefits stops. If the pension is terminated, it's taken over by the PBGC and their rules apply. Depending on how many choices you had for calculating the benefit while the plan was in effect, you may or may not be more limited in withdrawal options. The PBGC does not have any lump sum options, I believe without checking 2 spousal options (50% and 100%), term certain, and life benefits. I also believe that if a spousal benefit is chosen it applies if the employee dies prior to retirement although the benefit is based on the age of the employee when he/she dies instead of normal retirement age.

Jim

Jim,
An additional question please.

I retired from AA in 2004, and I also signed that waiver form (earlier mentioned)(that AA made NO effort to inform us about said waiver, that thank God the Union DISCOVERED), And I elected since 04' to take a smaller monthly amout TO ensure my ol' Lady would get 100%, should I "go" first, which she would get for the rest of HER life.
Having said(All ) that, I'm wondering if anything could change ?

Thanx,
Tom Barry/ Bear

 

[BoeingBoy]

I don't know anything about a waiver letter. Having said that, if your pension is terminated and turned over to the PBGC I think you'll keep the payment option you chose when you retired but at worst you could choose the same option again. Without knowing all the details of your situation, chances are you'll keep getting the same amount that you've been getting or at least very close to it - the PBGC may or may not calculate the benefit reduction that goes with the 100% spousal option exactly the same as AA did when you retired since both you and your spouse are older now.

One wrinkle may be if you are getting more than the PBGC max benefit but when the PBGC finishes it's calculations it comes up with a benefit less than the max. The PBGC will NOT pay more than what they calculate your benefit to be or the max. But having been retired so long I don't think that will be the case.

Like I said earlier, you'll get several mailings from the PBGC to confirm your information and ending with what your benefit will be under the various payment options. Until those start coming there's not any use to worrying about it.

Jim

 

[jimntx]

Please take note, yes there most likely is a POST (after you enter retirement) option to leave to your spouse. What I have posted about is PRE (you were to die BEFORE you leave AA). One reason I began this topic is because some folks will now be forced to work longer to provide better medical benefits.

If you die before you retire, if our pensions are anything like most pensions, then it doesn't matter what you have decided should be done, the pension management--whether AA or PBGC--will contact your designated joint annuitant, and ask them how they want the money. I know that because my wife died while still employed. Her company's HR department contacted me. I was given several ways I could take the money (lump sum distribution was not a choice for joint annuitants). I chose a lifetime annuity, and boy am I glad. My wife died 15 years ago; so, I shall probably collect substantially more than she ever paid in.

 

[JABORD]

If you die before you retire, if our pensions are anything like most pensions, then it doesn't matter what you have decided should be done, the pension management--whether AA or PBGC--will contact your designated joint annuitant, and ask them how they want the money. I know that because my wife died while still employed. Her company's HR department contacted me. I was given several ways I could take the money (lump sum distribution was not a choice for joint annuitants). I chose a lifetime annuity, and boy am I glad. My wife died 15 years ago; so, I shall probably collect substantially more than she ever paid in.

I'm very sorry to hear about your wife. Your statement of "it doesn't matter"is inaccurate when applied to AA's handling of your pension credit if you are married and die while still employed with AA. Also, boeingboy provides some good info related to PBGC but is not AA specific. This can be a very confusing subject but what first needs to be understood is that we are talking about what happens with your earned pension if you die while employed with AA.If you've never researched this, the point to understand is, if you die before you formerly retire, AA will by default pass on to your spouse 1/2 of your earned pension AND take back 1/2. You do have the ability to correct this once you understand it. The programs formal title is,'Pre-Retirement Survivor Benefit '

 

[tom barry]

Count me in too...Jim, I never knew that you're spouse had passed..which makes me feel bad that, that happened !

PS, REMEMBER (again) what I told you last weak about layoffs. RE: Yogi Berra said, "It ain't OVER till it's OVER" !!!!!!!!!!!!

Tom Barry/aka (the) BEAR