Vesting means that you have satisfied the service requirements for a pension and will be eligible for a pension once you meet the age and other requirements. Once you are vested, your previously earned Pension Credit cannot be cancelled.
You can become vested in three ways:
- Ten Year Vesting – You are vested once you have accumulated 10 Pension Credits.
- Limited Five-Year Vesting – You are vested once you have accumulated 5 Pension Credits without a Permanent Break in Service and have satisfied the Activity Test. This type of vesting became effective January 1, 1999.
- Normal Retirement Age Vesting – You are vested once you have attained Normal Retirement Age without a Permanent Break in Service.
Ten-Year Vesting
Once you have accumulated 10 or more Pension Credits, you will be eligible for a pension at any time after reaching age 55. Pension Credits used for Ten-Year Vesting do not need to be consecutive and are not subject to Break in Service rules. However, Pension Credits earned under the Alternative Eligibility Program (see page 5) do not count toward eligibility for an Early Retirement Pension. Accordingly, if some of your 10 Pension Credits were earned under the Alternative Eligibility Program, you will not be eligible for a pension until age 65.
Limited Five-Year Vesting
Once you have accumulated 5 Pension Credits without a Permanent Break in Service and have satisfied the Activity Test, you will be eligible for a Vested Pension at age 65.
Break in Service Rule for Limited Five-Year Vesting
If you do not meet a certain minimum earnings requirement in a calendar year, you have a One-Year Break in Service. A One-Year Break is temporary unless you have so many that the break becomes permanent. A Permanent Break in Service cancels the Pension Credits you previously earned for purposes of Limited Five-Year Vesting. However, any years cancelled for the Limited Five-Year Vesting will still count toward Ten-Year Vesting.
One-Year Break In Service
You have a One-Year Break in Service in any calendar year in which you do not meet the following earnings requirement:
One-Year Break In Service |
|
|---|---|
| 1961-1991 | $ 2,000 |
| 1992-1995 | $ 2,500 |
| 1996-1998 | $ 3,750 |
| 1999-2002 | $ 5,000 |
| 2003-2008 | $ 7,500 |
| 2009 | $ 8,000 |
| 2010 | $ 8,500 |
| 2011 | $ 9,000 |
| 2012 - 2013 | $10,000 |
A One-Year Break (or a series of One-Year Breaks) is temporary unless you have so many that the break becomes permanent.
Permanent Break in Service
You have a Permanent Break in Service if you have at least five consecutive One-Year Breaks and the number of consecutive One-Year Breaks equals or exceeds the number of Pension Credits you previously accumulated. For example, if you have three Pension Credits, you will have a Permanent Break in Service if you have five consecutive One-Year Breaks in Service. You can prevent temporary One-Year Breaks in Service from becoming a Permanent Break in Service by earning a Pension Credit.
For example, if you have three Pension Credits and then have three consecutive One-Year Breaks, you can cure the One-Year Breaks by earning one Pension Credit before you have five consecutive One-Year Breaks. If you earn more than the amount to avoid a One-Year Break ($10,000 in 2012) but less than the minimum to earn Pension Credit ($20,000 in 2012), the year is not counted as a One-Year Break in Service, but it will not cancel or interrupt the count of previous consecutive One-Year Breaks.
The Activity Test for Limited Five-Year Vesting
The Activity Test requires you to have a certain amount of earnings (or activity) on or after January 1, 1999 in order to be vested under the Limited Five-Year Vesting. For example, if you had at least 5 but less than 10 Pension Credits as of December 31, 1998, you were not automatically vested as of January 1, 1999. The Activity Test requires that you must first have some additional earnings in order to become vested.
The Activity Test only applies if you have 5 but less than 10 Pension Credits as of December 31, 1998. If you have less than 5 Pension Credits, this test does not apply to you because you already need at least one more year of Pension Credit to become vested under the Limited Five-Year Vesting. If you have 10 or more Pension Credits, you are already vested under the Ten-Year Vesting rule.
If you have at least 5 but less than 10 Pension Credits as of December 31, 1998, how much you must earn to satisfy the Activity Test depends on whether you are active or inactive as of December 31, 1998.
Active Participant: You are considered "active" if you did not have a One-Year Break in Service in 1998. To become vested under Limited Five-Year Vesting, an active participant needs one hour of sessional employment on or after January 1, 1999 and before incurring a Permanent Break in Service.
Inactive Participant: You are considered "inactive" if you had a One-Year Break in Service in 1998. To become vested under Limited Five-Year Vesting, an inactive participant needs to earn one Pension Credit on or after January 1, 1999 and before incurring a Permanent Break in Service.
Normal Retirement Age Vesting
You will be vested once you have attained Normal Retirement Age without a Permanent Break in Service.
Normal Retirement Age
If you have some Earnings Credit after January 1, 1988, your Normal Retirement Age is the later of age 65 or the fifth anniversary of the date you began to participate in the Plan.
If you do not have any Earnings Credit after January 1, 1988, your Normal Retirement Age is the later of age 65 or the tenth anniversary of the date you began to participate in the Plan.
Break in Service for Normal Retirement Age Vesting
One-Year Break in Service
As with the Limited Five-Year Vesting, a Break in Service rule applies to Normal Retirement Age Vesting, but it is a slightly different rule. Under Normal Retirement Age Vesting, you have a One-Year Break in Service in a calendar year in which you do not meet the following earnings requirement:
Break in Service for Normal Retirement Age VestingOne-Year Break in Service |
|
|---|---|
| 1961 – 1991 | $ 2,000 |
| 1992 – 1995 | $ 5,000 |
| 1996 – 1998 | $ 7,500 |
| 1999 – 2002 | $ 5,000 |
| 2003 – 2008 | $ 7,500 |
| 2009 | $ 8,000 |
| 2010 | $ 8,500 |
| 2011 | $ 9,000 |
| 2012 - 2013 | $10,000 |
Permanent Break in Service
You have a Permanent Break in Service between January 1, 1961 and December 31, 1987 if you have a number of consecutive One-Year Breaks that equal or exceeds the number of Pension Credits previously accumulated. You have a Permanent Break in Service on and after January 1, 1988 if you have at least five consecutive One-Year Breaks in Service and the number of consecutive One-Year Breaks equals or exceeds the number of Pension Credits previously accumulated. If you have a Permanent Break in Service, years of participation before the break are disregarded and you can only count years of participation after the break in determining whether you have reached Normal Retirement Age. You can prevent a series of consecutive One-Year Breaks from becoming a Permanent Break by earning a Pension Credit. For calendar years after 1998, if you earn more than the amount to avoid a One-Year Break but less than the minimum to earn a Pension Credit, the year is not counted as a One-Year Break, but it will not cancel or interrupt the count of previous consecutive One-Year Breaks.