Vishay Retirement Plan Plan Termination and Settlement. Questions and Answers

Transcription

1 Vishay Retirement Plan Plan Termination and Settlement Questions and Answers As previously described in notices and information sent to all participants, Vishay is terminating the Vishay Retirement Plan and settling all obligations to participants. The plan termination will not impact the amount of benefit that you are due under the plan. All benefits will be settled, either through the purchase of an annuity from an insurance company (which will provide you with lifetime* benefits when you retire) or one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option. Vishay expects to purchase the annuity contract (and distribute lump-sum payments to eligible participants who choose this option) in December The completion of this proposed termination and settlement was contingent upon the receipt of a favorable determination letter from the Internal Revenue Service ("IRS") and meeting certain IRS and Pension Benefit Guarantee Corporation ( PBGC ) requirements. Vishay has received a favorable determination letter from the IRS, and has met all other applicable IRS and PBGC requirements. If you are eligible to elect a lump-sum payment or an immediate annuity, an election packet was sent to you on or about September 30, If you do not make a timely election and return the Benefit Election Form and other supporting documents, if required, by November 15, 2016, you will automatically receive the deferred annuity. If you are currently receiving benefit payments, those benefits will continue as usual until Vishay purchases an annuity for you and it becomes effective. After the effective date of the annuity, you will continue to receive payments in the same amount and frequency, for the remainder of your life (and/or your spouse s life, if elected when you started benefit payments). The difference is that, today, the benefit is paid by a Trust at Bank of America, N.A., set up by Vishay for the benefit of plan participants; whereas, in the future, it will be paid by an insurance company selected by Vishay. Vishay has selected Merrill Lynch to provide administrative services related to the Vishay Retirement Plan. If you have discovered erroneous information about yourself or your benefits in any of the information that has been sent to you in the notices about the plan termination, you must report the error and provide correct information to Merrill Lynch at * All annuity contract and rider guarantees, including optional benefits and any fixed subaccount crediting rates or annuity payout rates, are backed by the claims-paying ability of the issuing insurance company. Investment products and insurance and annuity products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value Are Not Deposits Are Not Insured by Any Federal Government Agency Are Not a Condition to Any Banking Service or Activity

2 Q1: What is a Plan Termination? Does it impact my pension benefits? A1: Companies may terminate their pension plans at any time, but must settle all benefits due to participants. The plan must either purchase an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or issue one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option. Q2: Didn t Vishay already terminate the Vishay Retirement Plan? How is this different? A2: Effective January 1, 2009, Vishay froze the Vishay Retirement Plan, such that no new employees could participate and no further benefits would accrue. All benefits accumulated prior to December 31, 2008, other than benefits distributed since that date, are still payable to plan participants. Q3: Why is Vishay doing this? A3: The Vishay Retirement Plan is fully funded as of December 31, 2014 and 2015, but this funded status is still subject to several risks, such as interest rate changes and investment performance. By terminating the plan and settling all obligations, Vishay can provide you the benefits to which you are entitled, while reducing the overall long-term risk to the company. Q4: Does this mean Vishay is in financial difficulty? A4: No, this is what is referred to as a standard termination. All benefits will be fully settled either by Vishay purchasing for you an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or issuing one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option. (See Q3, Why is Vishay doing this? ) This is NOT a distress termination, where the Pension Benefit Guarantee Corporation takes over a plan from a company in bankruptcy or otherwise unable to pay benefits. Q5: Why did I receive the Notice of Intent to Terminate, the Notice to Interested Parties, the Notice of Plan Benefits, the election packet, and/or the Supplemental Notice of Annuity Information? A5: In June 2015, Vishay announced its intention to terminate the Vishay Retirement Plan effective August 15, All benefits will be settled, either through the purchase of an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option. Vishay is required to notify all participants in writing that your plan is ending. Vishay filed an application for a favorable determination letter from the IRS. A favorable determination letter ensures that all qualification requirements are met at the time of plan termination. Prior to filing that application, Vishay must notify all interested parties in writing. Vishay must also provide to all participants a Notice of Plan Benefits. For participants / beneficiaries currently receiving benefit payments, the Notice of Plan Benefits was intended to confirm information about the monthly benefit you are currently receiving. For participants who have not yet commenced benefit payments, the Notice of Plan Benefits provided you with information about the monthly benefit or optional lump sum benefit that you can receive.

3 If you are eligible to elect a lump-sum payment or an immediate annuity, an election packet was sent to you on or about September 30, If you do not make a timely election and return the Benefit Election Form and other supporting documents, if required, by November 15, 2016, you will automatically receive the deferred annuity. Vishay is required to provide participants, in writing, a Supplemental Notice of Annuity Information, which provides information about the insurance companies that will be considered for the purchase of the annuity contract. Vishay is also required to provide participants, in writing, a Notice of Annuity Contract once that information is available. If you are currently receiving benefit payments from the Vishay Retirement Plan, no action is required unless there is an error in the information shown on any of the notices provided you by Vishay (in which case you must report the error and provide correct information to Merrill Lynch). Q6: I don t think I was ever in the Vishay Retirement Plan. Why did I receive this information? A6: Vishay grew through several acquisitions over the years. To simplify the administration of its pension plans, it merged all of its other qualified U.S. pension plans into the Vishay Retirement Plan. These included the General Semiconductor, Inc. Pension Plan, the Pension Plan for Hourly-Rated Employees of Sprague North Adams, Inc., the BLH Retirement Plan for Hourly Paid Shop Employees, and the Vitramon, Inc. Pension Plan. Q7: Do I have to participate? A7: You do not have the option to remain in the plan. All benefits will be settled, either through the purchase of an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option. Q8: What do I need to do? A8: If you are eligible to elect a lump-sum payment or an immediate annuity, an election packet was sent to you on or about September 30, If you do not make a timely election and return the Benefit Election Form and other supporting documents, if required, by November 15, 2016, you will automatically receive the deferred annuity. (See Q16: What if I am eligible for a lump sum but do not make an election? ) If you have discovered erroneous information about yourself or your benefits in any of the information that has been sent to you in the notices about the plan termination, you must report the error and provide correct information to Merrill Lynch. If you are currently receiving benefits from the Vishay Retirement Plan, at the present time, there is nothing you need to do unless you have discovered erroneous information about yourself or your benefits in any of the information that has been sent to you in the notices about the plan termination (in which case you must report the error and provide correct information to Merrill Lynch).

4 Q9: When will I get my money? A9: Vishay expects to purchase the annuity contract (and distribute lump-sum payments to eligible participants who choose this option) in December If you are eligible and select an immediate annuity, after we receive your completed election form, we will prepare a supplementary benefit election package and mail it to you. Please complete the supplementary election packet and select your annuity type and return it as directed. Your election of the immediate annuity is not final until you properly complete and return the supplementary election package. If you are eligible and select an immediate annuity, the commencement or annuity starting date will be December 1, While the effective date of the immediate annuity you may elect is December 1, 2016, the time needed to process your election will extend beyond that date. Consequently, you would not receive your first payment until either January 1, 2017, or February 1, 2017, depending upon when your election forms are returned and validated. Regardless of when your first payment is actually made, you will receive all payments you are scheduled to receive retroactive to December 1, If you are not yet receiving benefits from the Vishay Retirement Plan and receive a deferred annuity on the settlement date, in the future, you will be able to elect a retirement date and form of payment from the insurance company based on the same provisions that would have applied to you under the Vishay Retirement Plan had it not been terminated. Although the effective date of the plan termination was August 15, 2015, final settlement was contingent upon Vishay s receipt of a favorable determination letter from the U.S. Internal Revenue Service and meeting all requirements set forth by the IRS and the PBGC. Vishay has now received a favorable determination letter and has met all other requirements. If you are currently receiving benefit payments, those benefits will continue as usual until Vishay purchases an annuity for you and it becomes effective. After the effective date of the annuity, an insurance company selected by Vishay will begin making benefit payments to you (See Q11 What will happen after Vishay purchases an annuity from an insurance company for me? ).

5 Q10: What options will I have to receive my benefit? A10: If you are currently receiving benefit payments from the Vishay Retirement Plan, those benefits will continue, in the same amount and frequency, for the remainder of your life (and/or your spouse s life, if elected when you started benefit payments). You will not have an ability to change your payment election. The difference is that you will be receiving your benefit payment from an insurance company selected by Vishay (See Q11, What will happen after Vishay purchases an annuity from an insurance company for me? ) If you are not yet receiving benefit payments from the Vishay Retirement Plan, you may be able to elect one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option (See Q14, Who may choose a single lump sum settlement? ). Participants who are eligible to elect one lump-sum payment will also be eligible to select an immediate annuity at the settlement date to be purchased from an insurance company on your behalf. Otherwise, an annuity will be purchased from an insurance company on your behalf, and in the future, you will be able to elect a retirement date and form of payment from the insurance company based on the same provisions that would have applied to you under the Vishay Retirement Plan had it not been terminated (in other words, you must meet the retirement (or early retirement) age requirement included in the Plan and no longer be employed by Vishay Intertechnology, Inc. or one of its subsidiaries). The specific types of annuity payment options available to a participant (for example, joint & survivor 100%, joint & survivor 50%, single life, 10-year certain) will vary depending on the individual s legacy plan. (See Q6: I don t think I was ever in the Vishay Retirement Plan. Why did I receive this information?, which describes the various pension plans which were merged into the Vishay Retirement Plan.) If you are eligible, more information about these options is provided in the election packet sent to you on or about September 30, Q11: What will happen after Vishay purchases an annuity from an insurance company for me? A11: If you are currently receiving benefit payments from the Vishay Retirement Plan, those benefits will continue, in the same amount and frequency, for the remainder of your life (and/or your spouse s life, if elected when you started benefit payments). The difference is that today, the benefit is paid by a Trust at Bank of America, N.A., set up by Vishay for the benefit of plan participants; whereas in the future, it will be paid by an insurance company selected by Vishay. If you are not yet receiving benefit payments from the Vishay Retirement Plan and choose the annuity, you may either elect to immediately commence benefit payments at the settlement date under the annuity, or, in the future, you will be able to elect a retirement date and form of payment from the insurance company based on the same provisions that would have applied to you under the Vishay Retirement Plan had it not been terminated.

6 Q12: I was planning to retire (commence benefit payments) soon (before the plan settlement is completed); can I still go ahead and do so? A12: Yes. However, given the timing of the anticipated settlement and the administrative process involved, at this point, you may only request November 1, 2016 as a retirement date and you must do so by calling the Merrill Lynch Retirement and Benefits Contact Center and requesting a November 1, 2016 benefit commencement date. You will not be able to initiate a November 1, 2016 retirement using the Benefits OnLine web site. In addition, you must meet the age requirements of the plan for retirement on November 1, 2016 and must terminate employment no later than October 31, Furthermore, if you retire on November 1, 2016, you will no longer be eligible to select a lump sum settlement on the settlement date. The settlement date is expected to be in December (The plan termination date of August 15, 2015 is a measuring point. The final settlement was contingent upon Vishay meeting certain requirements, which have now all been met). By commencing benefit payments, you would start to receive your monthly benefit, paid from a Trust at Bank of America, N.A., set up by Vishay for the benefit of plan participants. As part of the final settlement of the plan, an annuity would be purchased for you and then you would continue receiving those benefits at the same amount and frequency, for the remainder of your life (and/or your spouse s life, if elected), from an insurance company selected by Vishay. (See Q10, What will happen after Vishay purchases an annuity from an insurance company for me? ) Your benefit payable from the Vishay Retirement Plan is normally in the form of a monthly lifetime benefit. At the settlement date, Vishay is giving certain eligible participants the opportunity to elect to receive the value of your monthly lifetime benefit in the form of a single sum payment. This single sum or lump sum payment is a one-time benefit you will receive under the plan instead of your monthly annuity payments. If you elect to begin receiving benefits prior to the settlement date, you will NOT be eligible to select a lump sum payment. (See Q14, Who may choose a single lump sum settlement? ) To commence benefit payments before the settlement date, you must model benefits and request paperwork via the Merrill Lynch Benefits Online website or call the Merrill Lynch Retirement & Benefits Contact Center, in accordance with current procedures.

7 Q13: I am still employed by Vishay Intertechnology, Inc. or one of its subsidiaries, may I begin receiving my benefit payments now? A13: At the settlement date, all benefits will be settled, either through the purchase of an annuity from an insurance company (which will provide you with lifetime benefits when you retire) or one lump-sum payment that covers the entire benefit for certain eligible participants who choose this option. The Plan will no longer exist after all benefits are distributed either through the purchase of an annuity or the payment of lump sums. At that point you do not have the option to remain in the Plan. You may begin to receive benefit payments either in the form of a single lump-sum or under the annuity contract purchased for you by Vishay. While the Plan was still in effect, it was generally not possible to receive in-service distributions while you were still employed by Vishay Intertechnology, Inc. or one of its subsidiaries. Similarly, if Vishay purchases a deferred annuity from an insurance company on your behalf in settlement of your benefit, in the future, you will be able to elect a retirement date and form of payment from the insurance company based on the same provisions that would have applied to you under the Vishay Retirement Plan had it not been terminated (in other words, you must meet the retirement (or early retirement) age requirement included in the Plan and no longer be employed by Vishay Intertechnology, Inc. or one of its subsidiaries). Q14: Who may choose a single lump sum settlement? A14: Although there may be certain exceptions, the following are generally eligible to select a single lump sum settlement: Active employees who are participants in the plan, Participants who are no longer employed by Vishay or its subsidiaries, but not yet receiving benefit payments. Q15: How do I select a single lump sum settlement? A15: If you are eligible to elect a lump-sum payment, an election packet was sent to you on or about September 30, To select the single lump sum settlement, please return your properly executed Benefit Election Form and other supporting documents, if required, by November 15, If you do not make a timely election and return the Benefit Election Form and other supporting documents, if required, by November 15, 2016, you will automatically receive the deferred annuity. (See Q16: What if I am eligible for a lump sum but do not make an election? ) Q16: What if I am eligible for a lump sum but do not make an election? A16: By default, you will receive a deferred annuity from an insurance company in settlement of your benefits, and you will generally have no future right to elect a lump sum settlement (except for certain participants who had lump sum election rights under a previous pension plan which was subsequently merged into the Vishay Retirement Plan. This group includes certain former Vitramon and General Semiconductor employees).

8 Q17: What are the differences between lump sum and annuity? A17: Your benefit payable from the Vishay Retirement Plan is a pension benefit where the payment of your benefit is normally in the form of a monthly lifetime benefit. This monthly benefit payment is sometimes referred to as an annuity payment. At the settlement date, Vishay is giving certain eligible participants the opportunity to elect to receive the value of your monthly lifetime benefit in the form of a single sum payment. This single sum or lump sum payment is a one-time benefit you will receive under the plan instead of your monthly annuity payments. The Notice of Plan Benefits provided information about the estimated lump sum amount (if you are eligible) or the annuity amount to which you are entitled. The actual amount of your lump sum benefit is dependent upon interest rate and mortality assumptions that may be different when settlement occurs. When interest rates are higher, the lump sum amount is less and vice versa when interest rates are lower. If you are eligible, your election packet includes updated information about your lump sum amount or the annuity amount to which you are entitled. Q18: How do I compare the value of the lump sum versus the monthly annuity? A18: If you are eligible, your election packet includes updated information about your lump sum amount or the annuity amount to which you are entitled. The Notice of Plan Benefits provided information about the estimated lump sum amount (if you are eligible) or the annuity amount to which you are entitled. The actual amount of your lump sum benefit is dependent upon interest rate and mortality assumptions that may be different when settlement occurs. When interest rates are higher, the lump sum amount is less and vice versa when interest rates are lower. The amount of money you would receive over your lifetime under the annuity option depends on many factors that include - Your life span - Your marital status and the life span of your spouse - Current interest rates - The benefit payment option you elect to receive All these factors will affect the amount of money you will receive over your lifetime under the annuity option. Therefore we cannot answer this question directly. The answer will certainly vary from participant to participant.

9 Q19: Is the lump sum option or the annuity option a better choice for me? A19: Your choice can have major financial implications, so we recommend consulting with an investment professional. Here are some important factors to consider: Life expectancy - As a general rule, those people with good reason to believe they'll live well beyond the average life expectancy may find the annuity option more attractive, while those who don't expect to live beyond the average may find more benefit from the lumpsum option. Current income needs Health Risk / reliability of cash flows in retirement Inflation / interest rates Convenience Cost of managing your assets Taxes Gift and estate planning Q20: What are the pros and cons of the annuity? A20: Your choice can have major financial implications, so we recommend consulting with an investment professional. Potential Pros Regular income on a regular schedule for life No responsibility for making investment decisions Potential Cons Income may be vulnerable to inflation Income dependent on financial health of annuity provider Provides limited control over income tax exposure because cannot delay payments Provides limited flexibility (monthly payments are fixed) It ends when you die (or your spouse dies whichever is later, if elected) Consider your pension payout options carefully.

10 Q21: What are the pros and cons of selecting a lump sum? A21: Your choice can have major financial implications, so we recommend consulting with an investment professional. Potential Pros Opportunity to make investment decisions Ability to control assets Continued tax deferral with rollover to IRA or other qualified plan Possibility of outpacing inflation If you do not spend the entire balance, may be able to leave excess funds to heirs Potential Cons Responsibility for providing lifetime income Taxes due immediately on cash-payouts and annual tax on investment earnings Danger of spending assets too fast Danger of significant investment losses Consider your pension payout options carefully. Q22: If I am eligible, how will my lump sum be calculated? A22: If you are eligible, the lump sum is calculated using a methodology prescribed by the Pension Protection Act of The lump sum represents a present value calculation based on your future benefit payments that would have been due under the plan, your average life expectancy, and the current interest rate. If you are eligible, more details are provided in the election packet. Q23: Is Vishay s purchase of an annuity from an insurance company for my benefit taxable to me? A23: No, the purchase of an annuity by Vishay for you is not taxable. The income you receive from the annuity in the form of benefits will be taxable as those benefits are paid, similar to how your pension benefits would be taxable to you today. Q24: Is a lump sum taxable and if so, will taxes be withheld? A24: If you are eligible and choose a lump sum payment rather than the annuity, it is not immediately taxable if you choose a direct rollover to your IRA or another qualified plan that allows such rollovers. In this case, taxes are deferred until the time you take distribution from your IRA or another qualified plan. If you receive the lump sum directly (i.e. do not roll to your IRA or another qualified plan), then income taxes will be payable as well as additional federal taxes if you are younger than age 59 ½. The election packet includes a Special Tax Notice. Please see the Special Tax Notice for full details regarding the taxation of your lump sum benefit. If you do not roll the lump sum to your IRA or another qualified plan, Federal Income taxes will be withheld. In addition, State Income taxes will be withheld if required by applicable state law.

11 Q25: Can I rollover my lump sum distribution? A25: If you are eligible and choose a lump sum payment rather than the annuity, you can elect to have your lump sum payment rolled directly to an IRA or another qualified plan, if that plan allows such rollovers. If you are an active employee of Vishay Intertechnology, Inc. or one of its subsidiaries, you may also elect to have your lump sum distribution rolled directly into the Vishay Employee Savings Plus Plan, a 401(k) defined contribution plan. The option to roll over into the Vishay Employee Savings Plus Plan is available only to current employees of Vishay Intertechnology, Inc. and its subsidiaries. The rollover option you choose depends upon on your financial circumstances, needs and goals. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care. Q26: If I rollover my lump sum distribution, how will it be invested? A26: If you roll over your lump sum distribution, you will be responsible for future investment direction. Your choices can have major financial implications, so we recommend consulting with an investment professional. If you choose to have your lump sum distribution rolled directly into the Vishay Employee Savings Plus Plan ( VESPP ), a 401(k) defined contribution plan, your lump sum will initially be invested in accordance with your current investment direction. In other words, it will be invested in the same funds, with the same percentage allocation, that your employee payroll and company matching contributions are invested today. Of course, you can always reallocate those funds in accordance with the parameters of the VESPP. The option to roll over into the Vishay Employee Savings Plus Plan is available only to current employees of Vishay Intertechnology, Inc. and its subsidiaries. If you have any questions about the VESPP, including your current investment direction or how to reallocate balances within the VESPP, please contact Merrill Lynch at If you choose to have your lump sum distribution rolled directly to another qualified plan that allows such rollovers, your rollover contribution will initially be invested in accordance with the terms and conditions of that plan. Please contact that plan s administrator for more information. If you choose to have your lump sum distribution rolled directly to an IRA, please contact your IRA provider to determine how your rollover contribution will initially be invested.

12 Q27: Can I split my lump sum distribution between accounts? A27: Except as described below, no, if you are eligible and choose a lump sum payment rather than the annuity, you must choose a single IRA (or 401(k)) account to rollover your lump sum. If you were a participant in the Vishay Retirement Plan prior to January 1, 2009 and made employee contributions to the Plan, you may choose to split your benefit, receiving your employee contributions plus interest in the form of a lump sum, and receiving a reduced monthly benefit amount pursuant to the annuity. If you are eligible for this option, it is explained in your election package. This option is not available to other participants in the Plan, for example, participants in plans which were merged into the Vishay Retirement Plan (see Q6: I don t think I was ever in the Vishay Retirement Plan. Why did I receive this information? ). Q28: My Plan benefit is subject to a Qualified Domestic Relations Order ( QDRO ). Can I still select a lump sum distribution? A28: To receive a lump sum distribution using the standard Benefit Election Form, you must attest that your benefit is not subject to a QDRO. If your Plan benefit is subject to a QDRO and wish to elect the lump sum, you must call the Merrill Lynch Retirement & Benefits Contact Center (toll-free ) to determine if you are eligible for a lump sum payment, and if so, utilize an alternative election form that will be sent to you. You will be required to provide certain additional information. Q29: What is the role of the Pension Benefit Guarantee Corporation (PBGC)? A29: The PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private-sector defined benefit plans such as the Vishay Retirement Plan. If a plan does not have sufficient money to pay all benefits, PBGC s insurance program will pay participants the benefit provided by the plan up to the limits set by law. The employer can end the plan in a standard termination but only after showing the PBGC that the plan has enough money to pay all benefits owed to participants. The PBGC has several rules and regulations in place to ensure that plan sponsors, such as Vishay, treat participants fairly and in accordance with applicable law in the event of a standard termination. After plan assets have been distributed to provide all of your benefit, either through the purchase of an annuity contract or in another form permitted by the plan, the PBGC s guarantee of your benefit ends.

13 Q30: What level of protection does the Pension Benefit Guarantee Corporation (PBGC) provide for each benefit option? A30: The PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private-sector defined benefit plans such as the Vishay Retirement Plan. If a plan does not have sufficient money to pay all benefits, PBGC s insurance program will pay participants the benefit provided by the plan up to the limits set by law. After plan assets have been distributed to provide all of your benefit, either through the purchase of an annuity contract or in another form permitted by the plan, the PBGC s guarantee of your benefit ends. If you are eligible and choose a lump sum settlement, you are no longer entitled to any future benefits and are responsible to manage the amount received. Neither Vishay nor anyone else has further responsibility related to your benefits. If you receive an annuity, the insurance company providing that contract is responsible for making all remaining payments. Vishay no longer has any responsibility related to your benefits. Q31: Who can I contact for more information? A31: Vishay has selected Merrill Lynch to provide administrative services related to the Vishay Retirement Plan. The Merrill Lynch Retirement & Benefits Contact Center (toll-free ) would be happy to help you with any questions.