Editor's Note: This article was prepared by H/AREA Member Erwin Naumann. He presented it to the Bendix Alumni Group that met at the Maywood Inn on November 20, 2008. Erwin sent this article to H/AREA for inclusion in the print Newsletter. Because of its length, we have included a summary in the print Newsletter, and have printed the full article here on the H/AREA Home Page.
Question: How secure is our pension from Honeywell?
It's true the stock price is about half what it was 6 months ago, but that's
not a unique situation in these troubled financial times. On the bright side, it's
still paying a dividend of just under 4% and Honeywell appears to be a sound
company and shows no evidence of becoming insolvent.
As long as it continues that way, our pension is safe and is in good hands.
Question: But what if Honeywell did become insolvent?
After all, we recently saw several large corporations go under that we
never thought could fail! What would happen to our pensions in that case?
In 1974 Congress created, by the Employee Retirement Income Security
Act (ERISA), a federal agency called the Pension Benefit Guarantee
Corporation (PBGC) to protect the benefits in private-sector traditional pension
plans known as defined benefit plans. Most of us have such defined benefit
pensions, and our pensions are insured by PBGC.
Note: PBGC does not insure retirement plans that do not promise specific
benefit amounts such as profit sharing or 401(k) plans.
Question: Will PBGC continue our pension with the same amount that we
now receive from Honeywell?
If Honeywell should declare bankruptcy and the Pension Plan would
terminate without sufficient money to pay all benefits, PBGC's insurance
program will pay us the benefit provided by the pension plan up to the limits set
up by law.
(Most people would receive the full benefit they earned before the
plan terminated, but some people with very generous pensions may find that
their benefit exceeds PBGC's guarantee maximum).
All of us would most likely continue to receive the exact same pension
benefit that we now receive from Honeywell!
Question: What does the PBGC guarantee maximum depend on?
The maximum pension guarantee is increased every year to account for
inflation and the maximum guarantee also depends on the retiree's age when
the plan terminates.
As illustrated in Table 1, if the retiree's age when the plan terminates is
less than 65, then the guaranteed amount is decreased since the PBGC is
exposed to more years of liability (on a life expectancy basis).
Conversely if the retiree's age when the plan terminates is more than 65,
then the guaranteed amount is increased since the PBGC is exposed to less years
of liability (on a life expectancy basis).
For example, if the plan terminates in 2009, a person at age 45 would be
entitled to a maximum benefit of $1,125 monthly, whereas a person of age 65
would be entitled to a maximum benefit of $4,500 monthly,
and a 70 year old would be entitled to a maximum benefit of $7,470 monthly.
| Age When
Plan Terminates |
Monthly Max. | Annual Max. |
|---|---|---|
| 45 | $1,125 | $13,500 |
| 55 | $2,025 | $24,300 |
| 65 | $4,500 | $54,000 |
| 70 | $7,470 | $89,640 |
| 75 | $13,680 | $164,160 |
1) Your age when you retire, or
2) Your age on the plan termination date (or the date the sponsor entered
bankruptcy)?
The answer is 2) your age on the plan termination date (or the date the
sponsor entered bankruptcy).
E.G. you retired at age 55, but the company declares bankruptcy when
you reached age 70. The age that determines the maximum amount
guaranteed by PBGC is age 70.
PBGC doesn't care that the Company paid you a pension (albeit reduced)
at age 55; their liability starts when the company declares bankruptcy
when you are at age 70.
Question: Is there an inflation adjustment?
Although the maximum guaranteed amount is adjusted for inflation
every year, once PBGC starts paying your pension, the amount remains
constant thereafter (just as the situation is now with Honeywell).
As illustrated in Table 2, the PBGC maximum guaranteed amount
for a retiree of age 65 when the plan terminates increased from $1,688
monthly in 1985, to $4,500 monthly in 2009 to account for inflation.
| Year | Monthly Max. | Annual Max. |
|---|---|---|
| 1985 | $1,688 | $20,250 |
| 1995 | $2,574 | $30,886 |
| 2005 | $3,801 | $45,613 |
| 2009 | $4,500 | $54,000 |
To each of you in our retiree family we wish you a very Happy New Year from the Honeywell Employee Services, HR-Services and the Honeywell Retirement Service Center organizations.
With the beginning of this New Year, it gives all of us an opportunity to bring things into order and to try new things. Let us all proceed with what we do knowing that failure is not an option. As “Rocky” put it, “Go for it”!
Here are some things to think about:
OR
Using “YBR” you will have access to: 1) a Medical Library, 2) Self-Care Centers, 3) Drug Dictionary, 4) “Ask the Experts”, 5) Pools, Quizzes and “calculations” and 6) Manage your health.
Sincerely,
Tony Abbate
Honeywell Shared Services
How Do I Find My 'Vested' Pension ?
This question often arises as a person approaches retirement age.
There are many persons out there who have lost track of pension benefits owed to them from a previous employer.
The Pension Benefit Guaranty Corp. (PBGC) , the U.S. Government’s pension insurer,
holds unclaimed benefits that total over $75 million. There are around 26,000 people who
had the traditional pension – known as defined benefit – which are now closed.
Entitlement to these benefits begins by working for a company long enough to be
‘ VESTED ‘ in their pension plan. This means that no matter when you left this
employment, you are eligible for a pension at retirement age.
If you put in some substantial time as an employee with a company, its definitely
worth your time to try and hunt down those pension benefits.
First, since this is an H/AREA Home Page,let us direct our attention to the ‘Vested’
employees who once worked for following Companies:
Note: Record Keeping becomes a ‘ Fact of Life’ .
The most important instruction to our retiree population is to stay in touch with the
Company or their Service Center that is administering the Pension Plan. In most of
the correspondence with employees that pertain to estimates, sales, acquisitions, etc.,
employees are requested to retain this information along with all their other financial
papers. It is realized that this information over a passage of time and for various
unforeseen reasons can be displaced.
Here are some steps that a ‘Retiree’ can follow up on to track down any potential pension benefits.
To Reiterate the RM. Eligibility for Benefits is always governed by the
plan in effect at the time the participant of the plan left the company.
The pension plan IS NOT RETROACTIVE !!
Other Factors: Qualified Domestic Relations Orders (QDRO). Workman’s
Compensation, Court Orders. Bargaining Agreements, Plant Closures, etc.
are those Other Factors that come into play and may effect eligibility or how
the pension benefit is calculated. There Is No One Answer to All.
Here are Further Steps to consider.
If you are currently receiving a Bendix pension, and you:
you may be eligible for a “Bendix Retiree Death Benefit” equal to the greater of 15% of your “Average Annual Salary”** used in the pension computation, or a minimum of $2,000.00.
**NOTE: The “Bendix Retiree Death Benefit” for retirees with less than 10 years of service is equal to 15% of your “Average Annual Salary” used in the pension computation but prorated according to credited service.
If at the time of retirement, you received a document from your Bendix, AlliedSignal or Honeywell Employee Relations Department, advise your beneficiary, and keep the document in a safe place.
If, you did not receive any documentation, or have lost the documentation and believe that you are eligible, call the
Written requests should be mailed to:
When writing to Honeywell Retiree Services, please make sure that your name and Social Security Number are on all correspondence and documents. Also include a current copy of your pension pay stub, or stubs.
The "Medicare Part B Rebate” can now be requested by calling the Honeywell Retiree Service Center at 1-800-526-0744 . Also please be advised that the address for the Honeywell Retire Service Center referenced in June 1999 has changed.
The "Medicare Part B Rebate” applies only to Bendix retirees on pension from certain locations. At the time you enroll in Medicare Part B you become eligible for a plan benefit of $8.20 per month designed to help defray the cost of your Medicare. To receive this benefit, call the
to request confirmation of your eligibility for the "Medicare Part B Rebate”.
Written requests should be mailed to:
You will need to send a copy of your Medicare Part B enrollment card. When writing to Honeywell Retirement Services, please make sure that your name and Social Security Number is on all correspondence and documents.
At the H/AREA Spring General Meeting on April 22, 2004, Eric Warren, Director, Retirement Plans & Benefits Labor, Honeywell, spoke on the topic: "How Safe is My Pension?" During the question and answer time, the following question was raised:
"What is the maximum amount that PBGC can guarantee?"
The following is Eric's answer:
The answer is based on the age you retire.
PBGC's maximum benefit guarantee is set each year under provisions of ERISA. For pension plans ending in 2004, the maximum guaranteed amount is $3,698.86 per month ($44,386.32 per year) for workers who retire at age 65. This guarantee amount is lower if you begin receiving payments from PBGC before age 65 or if your pension includes benefits for a survivor or other beneficiary. The guarantee amount may be higher if you retire after age 65 or if you are over age 65 and receiving benefits when the plan ends. The table below shows PBGC's maximum guarantee for retirement at various ages. For certain disability benefits, special rules apply.
Examples of the maximum guarantee for a single life annuity with no survivor benefits are shown for retirement at ages 65, 62, 60 or 55. The maximum is lower if the benefit is paid in a form other than for a single life annuity, such as a form that provides for survivor benefits. The pension benefit that PBGC can pay will depend on your age, the provisions of your plan, the form of your benefit, the legal limits on what PBGC can guarantee, and amounts PBGC recovers from employers for plan underfunding.
| Monthly Guarantee Limit At Age 65 | |
| Monthly Guarantee Limit At Age 62 | |
| Monthly Guarantee Limit At Age 60 | |
| Monthly Guarantee Limit At Age 55 |
For more information, the PBGC website link is: PBGC.gov
At the H/AREA Spring General Meeting on April 22, 2004, Eric Warren, Director, Retirement Plans & Benefits Labor, Honeywell, spoke on the topic: "How Secure are the Honeywell Pension Plans?" The link to the summary and presentation is: Spring 04