Final Average Wage
Your Final Average Wage takes into account the average of your four highest wages from your last ten years of employment.
Your employer reports to the Plan your wages subject to federal income tax withholding, amounts withheld from your wages on a pre-tax basis, certain deferred compensation payments, and the number of hours for which you were credited with each pay period. Your total Compensation for a year (as defined by the Plan) is converted to a monthly Wage Base for the year by dividing by the number of months of Creditable Service (see below) for that year.
This wage base is then added to your 10-year wage history and the Wage Base from eleven years ago drops off.
When you terminate or retire, the Plan calculates your Final Average Wage by extracting the four largest Wage Bases in your 10-year wage history, adding them together, and dividing by four.
The current year’s Wage Base will not be added to your 10-year wage history unless you are employed by your Participating Employer on December 31 of that year.
Creditable Service
You receive one month of Creditable Service for each month during which you perform work for your employer or are otherwise paid for times you do not work (such as vacation or sick pay, or a paid leave of absence).
You would not receive service credit, however, during a break-in-service, an unpaid leave-of-absence, or a period in which your employer has suspended its active participation in the plan.
There is no limit to the amount of Creditable Service you may accumulate.
Benefit Accrual Rate
The benefit accrual rate is the multiplier in the benefit formula. It tells you how much of your Final Average Wage will be replaced for each year of Creditable Service.
Each Participating Employer must choose the benefit accrual rate that will apply to its employee-group. Four benefit accrual rate choices (1.75%, 1.50%, 1.25% and 1.00%) are available. Employers may change their accrual rate election once a year on July 1. (If you previously participated in another retirement plan and had your benefit transferred to this Plan, additional accrual rates may be applied to service accrued under that Plan.)
Therefore, you may have Creditable Service under one, two, three or even four different benefit accrual rates. As shown above, the benefit accrual rate will be multiplied by your Creditable Service earned while that rate was in effect.
This page includes only a general description of the above rules. Please consult the Summary Plan Description for more details, contact United Benefits Group with any questions, and be aware that the terms of the official Plan document will prevail in the event of any inconsistencies or misunderstandings.
