[ian]

I was fortunate enough to have a DB plan like this. We could contibute up to 3 percent (maximum allowable by law at the time was $3300 per year. Company matched it with half..ie up to 1.5 percent/$1650 per year.

I used it to bridge to 65 and to increase my survivor benefit.

On top of that I was also able to put up to $3300 in a group RSP.

Our DB plan was entirely funded by the employer, no employee DB pension deductions othe than the optional flex program.

 

[ian]

What always surprised me was the small percentage of employees who opted to take advantage of this company match.

 

[ian]

Our plan was available to all employees in the DB plan.

The provisions of the flexible plan were carried on for those in the supplementary plan (earning above the legislated limits) but paid out in a different manner. In my case they were incorporated into a lira account which I rec'd when I retired.

 

[ian]

Our flex plan was applied to pensionable earnings above the stat. limit by use of a 'notional' account. Since I signed up for the 3 percent/1 1/2 match the company applied this 1 1/2 percent match to earnings above the max, which I believe was in the 103k area at the time. This pool of monies was notional in that I knew how much it was butIcould not access it or even make decisions on how it was invested. My component of the 3 percent flex topped out and ended at the max 103K salary limit. The investment return on the notional account was based on the average of two funds. When I retired, this notional account was was given to me in the form of a lira. It could not be used to buy enhancements to the DB plan.

The only flex monies that I could use to enhance the DB plan were my contributions and the company match up to to, but not exceeding, the stat. Gov't cap.

Manyof the supplemental plans are different when it comes to earnings above the gov't max. In my case I had to take the supplemental component of the DB plan as either part of a one time payment of the entire DB commuted value. IF I selected a monthly DB pension, the only option was to take the cummuted value in three annual lump sum payments. This was OK since it was tax advantageous for me.

Clear as mud?

 

[ian]

The monies in the notional account were the employers 1.5 percent match on my earnings in excess of the 103K. These monies could not be used to buy enhancements to the DB plan. They cashed out in the form if a LIRA. Only my 3 percent and the company .1.5 percent match on earnings below the 103K limit could be used To buy DB enhancements. I was in the executive tier. No exec pension other than the supplementary. Employees got the details when the reached the pay band or is salary or variable income such as commission, bonus, etc.

 

[ian]

To the best of my knowledge, and recollections from speaking to a pension expert, is that the 3 percent optional flex does not/did not impact our PA. That was a benefit that my employer took advantage of when our plan was revised I the late 90's.

 

[ian]

I do not understand how this would reduce the er's db pension liability. There is no impact on the DB. The flex option is exactly that. It is used to 'buy' enhancements such as bridges, inflation adjustments, guaranteed payout periods, etc. When an ee selects this options it adds up to $1600 per year to the per ee benefits cost.