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QBS 14 Phased retirement DROP programs - Coggle Diagram
QBS 14
Phased retirement
DROP programs
Phased retirement (PR) approaches
Approaches
1) Part-time (same organisation)
2) Retire and then go back to work
contract hire
part time
temporary basis
full time
CREATIVE approaches
1) Retiree pool, retiree casual program, reserves at ready
2) Use third party
3) Snowbird programs
4) Allow in-service full DB payment after NRA
If work part time
can return full time after 3 months (if retired full time)
continued with accrual if hours > 1000
Common aporoach
If Phased a little
Modest change (60% or 80% schedule)
continues as regular ee
regular schedule
continues with benefits
If Phased a lot
Big change (schedule is 40% or less)
Irregular schedule / contract hire / seasonal
typically person has retired and commenced benefits
:check:
Advantages/Use of phased retirement
1)
Fill special / project gaps (staff at bear minimum, disabled or maternity leave)
2)
Well suited to lead training
3)
May have peak loads of work
4)
need part time or after hour operations
5)
reduces bottle necking
Goal
is ti extend careers of ees to retain institutional knowledge organisation may be at risk to lose
Development considerations
1)
Access if good fit :
conduct needs analysis,
identify talents issues and identify ee pref
integrate with talent mgmt startegy
2)
Used program to transfer knowledge
3)
align health benefits with work options
4)
provide managerial guidance:
approp use of program
allow work arrangement flexibility
easy approval process
monitor, evaluate and refine
PR - regulatory and other impediment to coordinate DB with PR
Actuary's definition of ideal PR
1)
Should benefit both to ER and EE
2)
Actuarially financially neutral
full actuarial decrease for early ret
full actuarial increase if work past NRA
Regulatory
Recent dev facilitating DB RP
1)
In svc distribution at age 62 allowed
2)
Can distribute any portion of a benefit without any formal red in working hours
Regulary and other imped. - US
1)
Diff coord with SS
2)
early access may result in inadequacy at full ret
3)
conflicts with early ret subsidies obj
4)
bonafide term not defined
CRA limitations
1) 60% of AB can be paid while still earning DB benefits
2) can pay stand alone bridge benefits
3) continued LOA or red pay accruals not allowed
4) Prohibition to designated plans
5) eligible ees : age 60 + OU age 55 + eligible for URD
Methods for protecting FAP during PR
1)
Annualized pay
2)
use a partial year in the dividor
3)
avg highest 5 consec compensation amounts during career
Disadvantage of looking to entire career of earnings:
ppt does not benefit from pay rate increases - may be viewed as unfair
Advantages for ER
1)
retains institutional knowledge and specialized skills
2)
reduce cost of hiring and training new ees
3)
ees still enrolled in active med plan (lower prem)
Provincial specifics
1)
Nova scotia, ON et NL: not offered
2)
all others permit, subject to age and max 60% lim, annual LS allowed within 10 yrs of NRA, must accrue ben suring PR
DROP Program
Traditional DROP
benefits commence but are paid inbto drop account
benefit accruals cease once DROP starts
usually required to work an add. period of time
at retirement, member receives annuity as of start of DROP period OR LS = accum DROP pmts with int
Interets Rate options
1)
Fixed rate
2)
indexed
3)
actual earnings - trust earnings ; ppt directed earnings
Adavantages ER
Retain valued ees
Adavantages EE
Cost neutral if early ret ben actuarially eq.
cost increase if early ret subsidies provided
Legal Issues
1)
treatment of cont limits
2)
definitely determinable issues
3)
ADEA (age discrim in employment act ) issues
4)
MRD rules
5)
add rules for private plans
DROP does not violates ADEA if:
ppt is voluntary
no max age limit to enter program
not used to reduce number of older ees