Basics of Thomson Reuters Pension (Part 1)
To many in today’s workforce, pensions are a foreign word. However, once employees learn about them and how they function, many are envious of their co-workers who may have had the opportunity to participate in a pension plan. Prior to the 401k, pensions were the investment vehicle employers offered to assist their employees with retirement savings. With the introduction and rollout of the 401k, pensions became less and less popular and in today’s world, very few companies still offer them.
Thomson Reuters is one of those companies who used to offer a pension plan to their employees and back in the early 2000’s discontinued the benefit to new employees, however employees who were eligible for a pension, were still able to participate in the plan. Employees often struggle with determining their retirement benefit as there are many factors that go into the calculation, including years of service, vesting, when to start taking the payments and what payment method should be elected. In this two-part series, I will explain how the pension plan works and what options there are for participants of the plan.
To be eligible for the Thomson Reuters pension plan, you needed to be an employee prior to March 1, 2006. Anyone hired after this date is not eligible to participate in the pension benefits.
Vesting means years of service with Thomson Reuters. To be eligible for benefits, you would need to have completed 5 years of service. Years of service begin the first day you are hired and end when you either; quit, are discharged, retire or die. If you have questions regarding years of service, you should contact the Thomson Reuters HR Service Center.
There are 4 dates within the pension plan.
- Normal Retirement
- First day of the month on or after the date when you reach age 65
- Early Retirement
- First day of any month after you attain the age of 55 and 20 years of vesting service or attain the age of 60 and 10 years of vesting service
- Late Retirement
- First day of any month after your normal retirement date and you no longer work at Thomson Reuters
- If you reach age 70 ½ and are still employed at Thomson Reuters, your pension benefit will begin on April 1st of the year after you reach the age of 70 ½
- Termination Before Early Retirement
- If you are entitled to a pension benefit and you are terminated, you can opt to receive a lump sum payout or wait until your normal retirement date and receive a reduced pension benefit
Below is an example on the benefit differences between a normal and early retirement.
Benefit Service: 25 years
Final Average Monthly Earnings: $5,000
Normal Retirement (Monthly Benefit)
Early Retirement (Monthly Benefit)
The amounts are rounded up to the next five-dollar increment per the plan document instructions. The above example is based on a single life annuity. If you elect another payment method, the amount would be impacted. I will review payment methods in part 2 of this series.
The above is a great example of how the timing of your retirement impacts your benefit and how each person’s or family’s situation needs to be taken into account before deciding when to elect to begin your pension benefit.
In part 2 of this series, I will talk about the different payment methods, taxation of the benefits and what happens if you die before you retire. If you have questions, please feel free to contact me at (612) 416-5997 or email me at firstname.lastname@example.org