Pension Questions Answered

January 11, 2009

Our Pension from Honeywell


By Erwin A. Naumann

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.

Table 1

PBGC Maximun Guaranteed Amount*

2009
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


*Note: This is a Straight -Life Annuity. A Joint
and 50% Survivor Annuity would have a lower Maximun.

Question: Which age determines the maximum amount guaranteed by PBGC?

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.

Table 2

PBGC Maximun Guaranteed Amount*

Age 65 When Plan Terminates
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


*Note: This is a Straight - Life Annuity. A Joint
and 50% Survivor Annuity would have a lower Maximun.


Question: Is there a website for PBGC?

Yes, it is PBGC.gov, and it is quite good.


January 29, 2007

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:

In addition, this will be a good time to make note of how to contact the Honeywell Retirement Service Center:

Try using our technology and enjoy the degrees of freedom it affords you by enabling you to navigate through the technology to obtain the information you desire. Of course, if there are any remaining questions and you wish to speak to a Customer Service Associate; then, call the Honeywell Retirement Service Center
using 1-800-526-0744.

Sincerely,

Tony Abbate
Honeywell Shared Services


November 30, 2006

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:

  1. The AlliedSignal Family.This family consists of Allied, Allied Chemical, Bendix,
    Eltra, Signal, UOP, Wheelabrator-Fyre, Sinclair and Valentine, etc.
  2. The Honeywell Family.This family consists of Honeywell Regulator Co.,
    Brown Instruments, Measurex, “GE”, TetraTech, etc.

If you have worked there, former employees should call the Honeywell Retirement
Service Center at 1-800-526-0744
to determine their pension eligibility.


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.

  1. The RoadMap (RM).
    The RM is the Pension Plan Document (PLD) that is In effect when
    the employee left The Company.
    This PLD will be the governance used to assess
    Eligibility (‘Vesting’) for any benefits under this plan.
  2. Years of Service.
    The Employee Retirement Income Security Act (ERISA) came into being in
    Year 1974. Please be aware that pension eligibility rules do change from time
    to time. These are some examples.
    1. Currently 5 years is required.
    2. In the 1980’s, some plans had ‘Step Vesting’ meaning with 10 years of
      service, a participant would receive, if eligible, 50% of the pension
      benefit with 10 years service and 10% per each year thereafter until
      100% of the benefit was attained.
    3. Pre-1984 (August 23, 1984). The participant would have had to sign a
      ‘Pre-retirement Death Benefit’. This would ensure that the spouse
      would be covered in case the participant predeceases his spouse. It
      should be noted that prior to this time, the spouse was NOT
      automatically covered.
    4. Post 1989. In general, ten (10) years of service was required.
    5. Post 1975. Ten (10) or more years required and in most cases the age
      requirement of attaining age 40 or more was lifted.
    6. Pre 1975. To be Pension Eligible, the former employee needs ten (10)
      or more years of service and needed to attain age 40.
      Some plans required fifteen (15) years of service and the age
      requirements of 45 years or more to be Pension Eligible.

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.

  1. Do You Have A Certificate of Deferred Pension Rights (CoDPR’s) ?
    These CoDPR’s may have been issued to the employee when the company he worked
    for had one of three happenings:
    (1) A Plant Closing; 2) A Divestiture; 3) A Sale.
    The CoDPR is a ‘ Group Annuity Contract ’ with a major Insurance Carrier
    such as ( Prudential, John Hancock Met Life, etc.) that was purchased by the company
    for the sole purpose of protecting the employee’s earned pension.
    Do not confuse this type of contract with life insurance policies.
    If the employees were given the option of ‘Cashing Out’ and they accepted those terms,
    then there are NO FUTURE BENEFITS.
  2. Some Questions to Ponder with Respect to Step #3.
    Do You – The Former Employee - have in your possession any documents or
    instructions regarding the Plant Closing, The Divestiture, or the Sale that
    establishes you employment bases?
    Did you perhaps stay after the company was Sold? Did the ‘Old Benefits’
    if any, move over with you and were integrated into the new company ?

    5. Who Else Can I Turn To If I Have None of the Above ?
    5.1 Social Security Administration (SSA).
You can obtain their SSA Income Earnings Report by Employer Identification Number.
All previous employers who paid you will be displayed in this report.Note: There is a
cost ranging from $35 to $90 for this service. This cost may not reimbursable to the employee.

Note: It has been pointed out that former employees may receive a letter from
the SSA titled “Potential Private Pension Benefit” explaining that the former employee
“MAY be entitled to pension benefits upon retirement”.This letter in itself
is NO GURANTEE that a former employee has a benefit. It should be noted that
in the lower half of the report, a Company is usually designated along with a person’s name
as a contact. The employee should follow-up and reach that contact or the PBCG.

    5.2 The PBGC.
The purpose of their website is provide a ‘Missing Participants’ Service’ (MPS).
When a company's pension plan is transferred to PBGC, the company is sometimes unable to locate
persons who participated in that plan and is hence unable to give them any benefits they may be
owed. PBGC is now continuing to look for them through their MPS.
Their website is:

    SearchPBGC

You can search by:
  1. Entering your last name or the company’s name to see if you’re on a list of ‘lost’ beneficiaries.
  2. Enter the Company’s Name. PBGC may have taken over their pension plan.

    5.3 The Pension Action Center (PAC).
Their website is:

    PAC

In the PAC Table, click on Publications.
Under Publications, Click on Finding a Lost Pension (FaLP). A Table of Contents appears.
There a host of individual topics that takes you through the FaLP.
This source was developed by the PBGC and the University of Massachusetts Boston.

    5.4 FreeErisa.
This website claims to offers free access to a very large database on Pensions
and Benefit Data. This can be accomplished by registering with them which
then establishes a free account.There are additional search options on a subscription bases;
Sort plans by type, size,and metropolitan region.Their website is:

    FE

    5.5 Corporate Affiliations (CA).
This website tracks mergers and acquisitions.This might very useful in providing a paper trail
of Whose Who in locating your pension benefits.Your former employer could have moved to
a new location or been bought out and had its name changed. Their website is:

    CA

CA offers a Free Trial, and two (2) Rather expensive options: A Subscription Service
and a Purchase of a Book or CD.
It is suggested that viewer go to the CA Table Menu and Click on Mergers and Acquisitions.
CA’s M&A Activity is:
  1. Recent Data Timeframe: 1 to 4 wks, or 1 Yr.
  2. Archive Data: Over 1 year old (Going back as far as 1976).

    5.6 Pension Rights (PR).
There are free pension-counseling centers in the U.S.A. To find a center in your area,
go to their website:

    PR

In the PR Table, Click on Pension Help.The Administration on Aging Pension Counseling
and Information Program currently serves 25 states. You can contact one of the projects
if your company, or your pension plan are within a project service area.


    5.7 Terminated or Abandoned 401K Plans.
The Dept. of Labor (DOL)Employee Benefits Security Administration offers help on this subject
through local offices which are listed on their website:

    EBSA

In their Table, Click on ERSA Offices.

The viewer can also do a web search at:

    EBSAAPS



     James Himich, Jr.
     Home Page Editor: 10/2006
    Note: The material for this article was based on two sources:
  1. Tony Abbate; Honeywell Shared Services, Morristown, NJ.
  2. Ask Encore / Focus on Retirement by Kelly Greene.
    Where’s My Old Job's Pension ?
    There Are Ways to Track It Down.
    Published in the WSJ Weekend Edition, September 2-3, 2006.


December 14, 2004

Bendix Retiree Death Benefit

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

Honeywell Retiree Service Center
at 1-800-526-0744

to request confirmation of your eligibility for a “Bendix Retiree Death Benefit”.

Written requests should be mailed to:

Honeywell Retirement Services
2601 Research Forest Drive
Woodlands, TX 77381

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.


December 14, 2004

Medicare Part B Rebate Update

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

Honeywell Retiree Service Center at
1-800-526-0744

to request confirmation of your eligibility for the "Medicare Part B Rebate”.

Written requests should be mailed to:

Honeywell Retirement Services
2601 Research Forest Drive
Woodlands, TX 77381

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.


April 22, 2004

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.

Year Plan Terminated
2004
Monthly Guarantee Limit At Age 65
$3,698.86
Monthly Guarantee Limit At Age 62
$2,922.10
Monthly Guarantee Limit At Age 60
$2,404.26
Monthly Guarantee Limit At Age 55
$1,664.49

For more information, the PBGC website link is: PBGC.gov


April 22, 2004

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


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