Overview
Certain Travelers employees born before April 1, 1948, and who participated in the prior TIC Pension Plan are covered by alternative final pay formulas. After March 31, 2003, eligible participants' earnings and service will not be recognized under the alternative final pay formulas.
At retirement, employees who are covered by the alternative formula(s) receive the better of the benefits from either the cash balance or the alternative formula.
If you were born before April 1, 1948 and participated in the former TIC plan since March 31, 1993, you are eligible for a benefit calculated under the Alternative I formula.
If you were born before April 1, 1948 and participated in the former TIC plan since December 31, 1989, you are eligible for the better benefit calculated under the Alternative I and Alternative II formulas.
You will continue to accrue benefits under the applicable Alternative Formula until the earlier of your termination date or March 31, 2003.
To find out if you are covered by these formulas
- Call 800.441.4378
- Select Option 2 for Retirement
Alternative I Formula
Alternative II Formula
Supplemental Benefit for Alternative II Formula
A supplemental age and service benefit is added to the above benefit if, as of December 31, 1989, your attained age and years of benefit service added up to 55 or more. This benefit is:
| 0.3% of final three-year average salary |
| TIMES |
| the number of years (up to 25 years) that your combined age and years of benefit service as of December 31, 1989 exceed 55 |
Grandfathered Pension Formulas after 3/31/2003
What is the significance of the March 31, 2003 date to eligible Travelers employees who are covered by the TIC alternative final pay formulas?
These are the facts:
Eligible Salary: Up to March 31, 2003, all eligible salary, overtime, commissions and bonuses that are currently recognized for the 3-year and 5-year final average earnings calculation in the alternative formulas will continue to be recognized. In other words, final average earnings will be calculated as of March 31, 2003, and then they will be permanently frozen on and after such date.
Eligible Service: Up to March 31, 2003, all eligible service will continue to be recognized in the alternative formulas and the 6-month service-rounding rule will apply. For example, if an employee actually had 22 years and 6 months of service as of March 31, 2003, his/her service would be rounded up to 23 years and then it would be permanently frozen at 23 years on and after such date.
Social Security Covered Compensation: This amount under Alternative Formula I, the 3-year final average earnings formula, will be calculated as of March 31, 2003, and then it would be permanently frozen on and after such date for the purposes of the alternative final pay formulas.
Social Security Benefit: This amount under Alternative Formula II, the 5-year final average earnings formula, will be calculated as of March 31, 2003, and then it would be permanently frozen on and after such date. The fact that an employee's actual Social Security benefit may increase after that date will not affect his/her Alternative Formula II benefit.
Early Retirement Factor: Although all of the above elements in the alternative formula calculations will be frozen, the early retirement reduction factor under both alternative formulas will not be. That is an advantage to an employee since the reduction factor declines as he/she attains an older age. For example, if an employee were age 57 as of March 31, 2003, the early retirement factor would be 80%. Two years later, the factor would be 90%.
Helpful Terms
Final five-year average salary is the average of the highest consecutive 60 months out of the last 120 months of your active salaried service before April 1, 2003. It includes your base salary, overtime and qualified incentive awards when they are earned. Special awards and certain deferred compensation are not included.
Covered compensation equals one-twelfth (1/12) of the average of the taxable wage base in effect under section 230 of the Social Security Act for each year in the 35-year period ending with the earlier of March 31, 2003, or the year in which you terminate employment or retire.
Your estimated Social Security benefit is determined based on your earnings with Travelers Insurance or an affiliated company; it is assumed that the payment date is the later of the date you retire or the date you first become eligible for Social Security payments. Your Social Security offset is determined when you retire, and will stay the same even if your Social Security benefit increases.
Early Retirement Factor
| Your Age at Retirement |
Percentage of Benefit Payable |
| 62-65 |
100% |
| 61 |
97.5% |
| 60 |
95% |
| 59 |
90% |
| 58 |
85% |
| 57 |
80% |
| 56 |
75% |
| 55 |
70% |
|
