NEGOTIATING NEWS #7
The text of Negotiating News #6 may be subject to misinterpretation in its description of the actuarial reduction of pensions. As explained in Negotiating News #6, a MUN pension is subject to actuarial reduction if the pension commences before certain specified conditions are met: if an individual retires and begins to collect a pension between the ages of 55 and 60 with less than 30 years of pensionable service or by virtue of taking advanced early retirement, that individual's pension is reduced by the amount of the actuarial reduction applied to it. The annual amount of pension is fixed at the time of retirement, and any actuarial reduction applied to the pension remains in effect until the death of the pensioner or his/her survivor.
As a further point, note that the calculations in Negotiating News #6 assume that the retirement inducement is fully tax sheltered. The extent to which tax sheltering of a retirement inducement is possible will depend on individual factors; therefore, members considering early retirement are strongly advised to obtain qualified professional assistance in their tax and other financial planning. The examples and assumptions of Negotiating News #6 are used for purposes of illustration only and should not be relied upon as a substitute for specific professional advice. Such advice is necessary because the most advantageous financial arrangements for early retirement are highly dependent on personal circumstances.
Some of the values in column 1 of the table in Negotiating News #6 are incorrect. Correct values are givenbelow.
| 1 | |
| age started at MUN (years) | 28 |
| age now (years) | 55 |
| years of pensionable service | 27 |
| pension, after actuarial reduction ($ thousands) | 25.5 |
| actuarial reduction ($ thousands) | 10.9 |
| early retirement incentive ($ thousands) | 157.5 |
| projected annual income from invested incentive ($ thousands) | 12.3 |
| Excess of projected income from invested incentive over actuarial reduction ($ thousands) | 1.4 |
| Projected annual income from pension plus invested incentive ($ thousands) | 37.8 |
MUNFA Negotiating Committee: