The Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW Local 245

Transcription

1 The Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW January 2011

2 The Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW This Summary Plan Description is created for the use of eligible participants in The Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW who are actively employed by the Company before January 1, 2005: For purposes of this summary, the term Company means FirstEnergy Corp. and any of its operating companies having employees represented by IBEW to which the provisions of the Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW (see section entitled Participating Employers ). If you are a terminated employee of the Company and have been rehired, please contact the Pension Department for information about the Plan that applies to you. If you are not eligible for coverage under the pension benefits described in the document, the document that applies to you is the one that is: The one that is in effect on the date that you terminated employment or The FirstEnergy Pension Plan document if you were hired on or after January 1, January 2011 Page 2

3 Table of Contents If you are a terminated employee of the company and have been rehired, please contact the Pension Department for information about the Plan that applies to you....4 Introduction...4 Benefits at a Glance...5 Eligibility...6 Enrollment...6 Your Cost...6 Your Service...6 Retirement Types...10 How Your Benefit Is Calculated...12 Vesting: Earning Your Right to a Pension Benefit...16 Involuntary Separation...17 How Your Pension is Paid...18 Normal Forms of Payment...18 Optional Forms of Payment...19 Survivor Benefits...22 If You Die Before You are Vested...22 If You Die After You Have Left the Employment of the Company...24 If You Die After Commencement of Pension Benefits...24 Important Terms Under the Plan...25 Administration of the Plan...27 Claiming Benefits...27 Important Plan Information...32 Required Legal Information...37 Statement of ERISA Rights...40 January 2011 Page 3

4 If you are a terminated employee of the company and have been rehired, please contact the Pension Department for information about the Plan that applies to you. Introduction Planning for a safe and secure retirement must begin long before the day you finally decide to stop your regular employment and begin a new chapter in your life. The Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW is provided by the Company to help you build financial security for your future. It represents only a part of the income you should take into account so you can make the most of your retirement years. When combined with your personal savings and Social Security benefit, you can increase the potential of a sound financial future. Your pension is based on your earnings, the length of time you work for the Company and your age at retirement. The Company pays the entire cost of the Plan. The Plan is considered a defined benefit plan qualified under the Internal Revenue Code. This Summary Plan Description (SPD) describes the benefits and options available to you under the Plan. Generally, the pension benefit formula that applies to you depends on your date of hire. However, if you: Terminated your employment with the Company and were later rehired or Transferred between bargaining and non-bargaining groups The determination of the pension benefit formula that applies to you is governed by a specific set of rules. If you are a rehired former employee or a transferring current employee, you should contact the Pension Department or the Human Resources Service Center for more information about the pension formula that applies to you. If you have any questions after reading this summary, please contact the Human Resources Service Center at The provisions of the Pension Plan and eligibility for participation do not constitute an employment contract with any individual. Being a participant in this Plan does not grant any current or future employment rights. Plan participation is not an inducement or condition of employment. Generally, employment is not for a definite period and may be terminated at will by either the Company or the employee, subject to the collective bargaining agreements, if applicable. Your right to any payment under this Plan is determined solely under the Plan s provisions. January 2011 Page 4

5 Benefits at a Glance Eligibility Enrollment Service Plan Cost Vesting Retirement If You are Permanently and Totally Disabled If You Leave the Company Before You Are Eligible to Retire Reduction for Early Payment Forms of Payment When You Are Ready To Retire Survivor Benefits for Active Employees Survivor Benefits for Retirees If you are an employee of a Participating Company, you become eligible to participate in the Pension Plan on your date of hire or the date that your Participating Company adopted the Plan, if later. You are automatically enrolled in the Plan when you become eligible A year and fractional years of service for vesting and benefit determination are credited for each calendar year in which you are an employee of a Participating Company or are paid for at least 1,000 hours. The Company pays the entire cost. You make no contributions to the Plan. You become vested when you complete five years of service during which you are paid for at least a 1,000 hours each year. You can receive vested benefits as soon as you retire from the Company if you are age 55 or older and have at least 10 years of service or after 5 years of Credited Eligibility Service if you were hired on or after age 60. There are three types of retirement under the Plan: normal retirement at age 65 early retirement between the ages of 55 and 65 or deferred retirement after age 65 If you become disabled after 10 or more years of service, you may be eligible to continue to accrue earnings (at the rate of pay when you became disabled) and credited service until the earlier of; your recovery, you attain age 65 or your death. If you leave the Company with: more than 5, but less than 10, years of Credited Eligibility Service, you can receive a vested deferred benefit when you attain age 65 at least 10 years of Credited Eligibility Service, you can receive a vested deferred benefit as early as age 55. If you are able and elect to receive pension benefits before you attain age 65, your monthly benefit may be reduced for early payment. You can elect to receive your pension benefit under the normal form of payment or choose one of the optional forms. Normal forms of payment include: a single life annuity if you are not married when you begin receiving your pension benefit or depending on the date you were hired, a 50% or 55% qualified joint and survivor annuity if you are married when you begin receiving your pension benefit. If you retire, optional forms of payment are available which provide a benefit during your lifetime and, as applicable, a payment to your Beneficiary after your death. Please notify the Plan at least 30 days but not more than three months before your planned date of retirement. If you are an active employee who is married and you die after you have become vested but before you begin receiving a pension benefit, the Plan pays a benefit to your surviving spouse. The benefit is based on the pension benefit formula that applies to you and the amount you accrued, which is adjusted to reflect a 50% or 55%, as applicable, Joint & Survivor annuity option. The date that survivor benefits commence depends on your age and years of service on the date of your death. Vested active employees who are not married may complete the applicable form naming a Beneficiary for their pension benefit. No survivor benefits apply for unmarried employees who terminate employment with the Company for any reason other than retirement. Survivor benefits paid after you retire and start your pension will be based on the payment option you elect. January 2011 Page 5

6 Eligibility You are eligible to participate in the Plan if you are: a bargaining unit employee represented by UWUA of a Participating Employer covered by a collective bargaining agreement that provides for participation in this Plan hired before January 1, 2005 not a leased employee under the terms of the Plan. When You Become Eligible Full-time employees: Your participation begins on your date of hire or, if later, the date that the Participating Company employing you adopts the Plan. Part-time employees: You become eligible to participate when you have completed 1,000 hours of work in the first year of employment or in any calendar year thereafter. If you have any questions about your eligibility, please contact the Human Resources Service Center ( ). Enrollment You are automatically enrolled in the Plan if you are eligible. Your Cost The Company pays the entire cost of the Pension Plan. You are not able to contribute to the Plan. Your Service Your service under the Plan is generally the number of years (and full months) of your employment adjusted for any breaks in service. Service with the Toledo Edison Company before 1999, as well as with any FirstEnergy participating employer after 1998, will be included. An employee will be credited with one year of service if he/she works 1000 hours or more during the first 12 months following date of hire. After the first 12 months, this 1000-hour test is applied on a calendar year basis, starting with the calendar year that begins during the first 12 months. In addition to hours at work, any vacation, holiday, sick leave, military leave or Union service leave time, and certain additional compensated time off is credited to meeting this 1000-hour test, subject to rules and limitations provided in the Plan. January 2011 Page 6

7 Break In Service An employee has a break in service for purposes of the Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW on the date his or her employment terminates unless he or she is rehired by one of the FirstEnergy participating employers within 12 months from the date of termination. If the employee is rehired within 12 months, the period of absence will be credited as part of the employee s service (Credited Eligibility Service) for determining eligibility for a Normal, Early Retirement or Deferred Vested Benefit. A break in service, i.e., a termination, does not occur as long as an employee is on a Recognized Leave of Absence for military service, medical reasons (including long-term disability), occupying a full-time position with the Union, or up to 365-day layoff if the employee returns to active full-time employment at the end of the Recognized Leave. Employees approved for Long-term disability (a Recognized Leave of Absence) after they have 10 or more years service will continue to be credited with service and earnings, based on their straight time rate of pay at date the disability began. The crediting of service and earnings will continue until the earlier of death, recovery, i.e., no longer being eligible for Long-term disability benefits or retirement, but not later than age 65. If the employee s employment terminated during a maternity/paternity absence, he or she may be entitled, in some cases, to as much as one additional year of absence and still be eligible for reinstatement of service and earnings under the above rules. Maternity or paternity absence includes absence from employment for the following: Pregnancy of employee, Birth of the employee s child, Placement of a child with the employee for adoption, and Caring for the child immediately following birth or placement for adoption. Military Leave and Layoffs If you are on military leave or layoff, the following rules are used to determine service for the purposes of eligibility and benefit calculation: Military Leave If you go on a military leave and return to work before your veteran's reemployment rights end, that time will not cause a break-in-service. In addition, that time will count as both Eligibility Service in determining participation in the Plan, vesting, disability (if applicable), eligibility for early retirement, surviving spouse benefits or early retirement factors applicable to a vested deferred benefit and Benefit Service for calculating the amount of your pension benefit. In addition, you will receive credit for earnings which you would have received during the period of your military service. January 2011 Page 7

8 Layoff During the period in which you have recall rights, you will not incur a break in service due to absence while you are on layoff for less than 365 days. If you don t return to work upon recall, you will be assumed to have terminated your employment on the last day of the period allowed for your return. January 2011 Page 8

9 Rehire If you terminate employment and are subsequently rehired by one of FirstEnergy s Companies how your service is counted as well as the amount of the pension benefit you ultimately receive may be affected. Although each rehire situation needs to be reviewed on a case by case basis, there are some general guidelines that will apply. If you were not vested and you left the employment of Toledo Edison prior to the merger with FirstEnergy and you were rehired by FirstEnergy after the completion of the merger, all of your prior service and pensionable earnings were lost. If you were vested and you left the employment of Toledo Edison prior to the merger with FirstEnergy and you were rehired by FirstEnergy after the completion of the merger, your prior service and pensionable earnings will be counted for your prior vested pension calculation. You will begin to earn a new separate benefit - based on earnings and service since rehire date - under the FirstEnergy plan. You will be considered immediately vested in the new benefit because of your Eligibility Service with the prior plan. Normal early retirement factors will be used for both prior and current benefit calculations if you ultimately retire from FirstEnergy. If you terminate employment before becoming eligible to retire, both benefits will be calculated using deferred vested early retirement factors. If you are not vested and you leave the employment of FirstEnergy and you are rehired within 5 years under the same FirstEnergy pension formula(s), your prior service and pensionable earnings will be restored and applied to continued participation in the FirstEnergy formula(s). If you are not rehired within 5 years, all prior service and earnings will be lost. If you are not vested and you leave the employment of FirstEnergy and you are rehired within 5 years under a different FirstEnergy pension formula(s), your prior service and pensionable earnings will be restored and applied to the original formula(s). You will begin to earn a separate benefit - based on earnings and service since rehire date - under the FirstEnergy formula(s) that apply to new hires. Pension benefits under both the original and current (new hired) formula(s) will vest based on the combined eligibility service. If you are vested and you leave FirstEnergy and you are rehired under the same FirstEnergy pension formula(s) prior service and pensionable earnings will be restored and applied to continued participation in the FirstEnergy formula(s). If you are vested and you leave FirstEnergy and you are rehired under a different FirstEnergy pension formula(s) than you had when you last left, prior service and pensionable earnings will be applied to the original formula(s). You will be immediately vested and begin to earn a separate benefit - based on earnings and service since rehire date - under the FirstEnergy formula(s) that apply to new hires. January 2011 Page 9

10 Normal early retirement factors will be used for both prior and current benefit calculations if you ultimately retire from FirstEnergy. If you terminate employment before becoming eligible to retire, both benefits will be calculated using the applicable deferred vested early retirement factors. Retirement Types There are three retirement types: Early Retirement You can begin receiving retirement benefits from the Plan as early as age 55 if you have completed ten or more years of Credited Eligibility Service. However, if you start receiving retirement benefits before age 65 the amount you receive may be reduced. Among other factors, the reductions for early retirement depend upon whether you retire from active employment or as a vested terminated employee. This is explained later in this Summary. Normal Retirement Your normal retirement date is the first of the month following your 65th birthday or the date you complete five years of Credited Eligibility Service, whichever occurs later. Deferred Retirement If you continue working for the Company beyond age 65, your pension benefits will not begin until you actually retire, and you will continue to earn credit for earnings and service. You must complete at least five years of eligibility service before you would be eligible for monthly pension benefits from the Plan. Disability Provisions If, after ten or more years of Credited Eligibility Service, you become permanently and totally disabled and: you meet the requirements for benefits from the Company s Long-Term Disability (LTD) Plan, or if you are not a participant in the Company s Long-Term Disability (LTD) Plan and the Company s Medical Director determines that you are totally and permanently disabled You will be considered to be on a Recognized Leave of Absence and will continue to accrue Earnings, and Credited Eligibility Service toward your pension benefit. For purposes of this provision, Earnings are defined as your Basic Earnings as of the date that you became permanently and totally disabled. You will continue to accrue Earnings and Service until the earlier of: the date you are no longer disabled under the terms of the Plan, the date you die, the date you retire, or January 2011 Page 10

11 the date you attain age 65. You will be required to provide documentation to support your claim of disability Vested Termination If you are a vested employee who terminates employment before the date you are eligible to retire, you may be able to receive your vested benefit early. For more information about terminated vested participants receiving early payment of benefits please see below. January 2011 Page 11

12 How Your Benefit Is Calculated Early, normal or deferred vested retirement benefits are calculated taking into account your Normal Retirement Benefit. The Normal Retirement Benefit is the accrued amount that you would be entitled to at Normal Retirement (age 65). It is calculated using the Career Pay Formula. The Career Pay Formula The Career Pay Formula is used to calculate your pension benefit based on your total eligible earnings. Credited Career Earnings include: 1. Accumulated Contributions A portion of your accrued benefit is based on your contribution made to the Plan from January 1, 1949 (when the Plan first went into effect) to January 1, 1973, plus interest. 2. Past Service Credits Additional pension benefit amounts credited if you had Company service and Plan participation prior to This is a frozen benefit and is maintained in the Company records as a frozen pre-1995 amount that is added to your benefit calculated under Total Earnings below. 3. Career Earnings Your annual base earnings (while in the Plan) from January 1, 1973 through December 31, This is a frozen benefit and is maintained in the Company records as a frozen pre-1995 amount that is added to you benefit calculated under Total Earnings below. 4. Total Earnings Your annual base earnings plus bonuses, overtime, higher classification pay, differential pay, shift premium, sick pay and vacation pay (at the time of exit) since January 1, This benefit is calculated using two components. The first will use Total Earnings from January 1, 1995 through December 31, 2001, times 1.95%. The second will use Total Earnings after December 31, 2001, times 2.125%. Normal Retirement The amount of your pension benefit at normal retirement is determined by the formula with no reductions for early retirement and would be calculated as follows: An Example Normal Retirement Employee Data Years of Benefit Service 35 Pre-1995 Frozen Monthly Benefit $ Total Earnings January 1, 1995 December 31, 2001 $274, Total Earnings After December 31, 2001 $396, January 2011 Page 12

13 Total Earnings January 1, 1995 December 31, $274, Negotiated multiplier 1.95% Annual Benefit (1) $5, Total Earnings After December 31, 2001 $396, Negotiated Multiplier 2.125% Annual Benefit (2) $8, Total Earnings Benefit (Annual Benefit 1+2) $13, Monthly Benefit (Annual divided by 12) $1, Pre-1995 Frozen Monthly Benefit $ Total Monthly Benefit* $1, * This represents the benefit payable at age 65. Further reductions may apply for early retirement and the form of payment you elect. Early Retirement The above amount represents your monthly pension benefit if you retire at age 65 (Normal Retirement). It may be reduced for early retirement. If you have completed ten or more years of eligibility service, you can retire as early as the first day of the month following your 55 th birthday (effective January 1, 2007, if your 55 th birthday is the first day of the month, you may retire on that day). Your Benefit Commencement Date is the date on which you elect to have your pension benefit begin. Early Retirement Reduction Currently, you may elect early retirement any time after reaching age 55, if you have at least 10 years of Credited Eligibility Service. If you are under age 65, your pension benefit will be reduced for life according to the following table: EARLY RETIREMENT REDUCTION TABLE Age at Early Retirement Your age 65 benefit is multiplied by 65 (or older) 100% January 2011 Page 13

14 64 100% % % % % 59 89% 58 84% 57 79% 56 74% 55 69% The actual percentage used would be adjusted to reflect your age in years and months at the Benefit Commencement Date. This chart applies only to early retirement benefits. It does not apply to vested employees who terminate employment before they are eligible to retire and elect to receive their vested benefit before age 65. For more information concerning reduction factors for terminated vested participants receiving early payment of benefits, please see page 16. Example: Here s what would happen if the employee in the previous example decided to retire at age 58 with 35 years of service. Retirement at this age is considered an early retirement and an 84% early retirement factor will be applied to the Normal Retirement Benefit amount as follows: Employee Data Age at benefit Commencement 58 Normal Retirement Benefit $1, Early Reduction Factor.84 Early Retirement Benefit equals $1, x 84% Early Retirement Benefit $1, January 2011 Page 14

15 Early Retirement: Deferring Commencement of Your Pension Benefit If you wish, you may choose to retire and elect to defer payment of your pension benefit to a future date but no later than the 1 st day of the month following your 65 th birthday. If you choose to defer the commencement of your pension benefit, that benefit is calculated based on your age at the time payment begins and not on your age at retirement. The age at which you begin receiving your pension will determine whether the early retirement reduction will apply. Deferred Retirement If you retire after your 65th birthday with five or more years of eligibility service, your deferred retirement benefit will be calculated based on your Career Earnings and years of Benefit Service at the time you terminate employment. Regardless of what happens to your earnings after age 65, the Plan will pay a benefit that will not be less than what you would have received at age 65 if you were eligible to retire. January 2011 Page 15

16 Vesting: Earning Your Right to a Pension Benefit If you have completed at least five full years of Credited Eligibility Service, you are entitled to begin receiving a pension benefit at age 65, whether or not you are actively employed by the Company at the time you retire. This is called being vested in the Plan. The amount of your pension benefit will be based on your age when benefits begin and your earnings at the time you leave the Company. If You Leave the Company Before You Retire If you leave the Company with more than five but less than ten years of Credited Eligibility Service before age 55 or between age 55 and 65 your benefit will be based on your earnings and Credited Eligibility Service at the time of your termination. However, you may not start payment until age 65. If you have 10 or more years of service when you leave you may request early commencement of your vested benefit any time after your 55th birthday. If you wish to do so, you must apply in writing to the Plan Administrator at least three months before your planned benefit commencement. If your pension benefits begin before age 65, the amount of your benefits will be reduced. The reduction factor for early commencement of vested benefits for employees who are no longer employed by the Company is different than that for active employees, described on page 13. The following table illustrates how your benefit would be calculated at various commencement dates. Although all early commencement dates are not shown, you can use these percentages as a guide when considering the amount of your benefit. DEFERRED VESTED EARLY RETIREMENT REDUCTION TABLE Age at Early retirement 65 (or older) The Career Pay Formula Your age 65 Pension benefit multiplied by 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% January 2011 Page 16

17 Your benefit will automatically be paid to you in a single payment when you terminate employment if the present value of your benefit is less than $1,000. If the present value of your benefit is at least $1,000 and less than $5,000, you have the option of electing an annuity starting as early as age 55 or an immediate payment of the present value of your benefit. If you leave the Company before you are vested, you will not be entitled to receive any benefits from the Plan. Involuntary Separation If you are: between age 50 and 54, have 10 or more years of Credited Eligibility Service, are involuntarily separated from the Company on or after August 1, 2001, and qualify for and elect to receive benefit from the FirstEnergy Severance Benefits Plan, You may elect to receive your pension benefit as early as age 55 using the early retirement reductions percentages (see page 13) instead of the terminated vested early retirement reductions shown above. January 2011 Page 17

18 How Your Pension is Paid It is generally a good idea to apply for pension benefits at least three months before your retirement. This will allow for the timely processing of your first pension check. The way your pension is paid normally depends on whether you are married at the time you begin receiving payments. However, if you elect no method of payment at the time of your retirement, payment will be made as follows. Normal Forms of Payment Regardless of your years of service, if you leave the Company before you retire, you may only elect one of the normal forms of payment described below. If You are Married Qualified retirement plans, such as the Toledo Edison Company Bargaining Unit Retirement Plan for Employees Represented by IBEW, are required by law to provide at least a 50% pension benefit to surviving spouses to assure they continue to have a pension income after your death. Your spouse must give written, notarized consent to relinquish this benefit in order to prevent this form of payment. Automatic (55%) Joint & Surviving Spouse Benefit Option: If you are married, the normal method of payment is the Automatic (55%) Joint & Surviving Spouse Benefit Option. There is no reduction to your pension benefit for the election of this option. If you predecease your spouse, after your death, 55% of your monthly benefit will be paid to your spouse for your spouse s life, if he or she: (a) survives you, (b) was married to you on the Benefit Commencement Date and (c) had been married to you for at least one year at the time of your death. Only your spouse may be named as your beneficiary for this option and the election of any option other than the Automatic (55%) Joint and Surviving Spouse Benefit Option requires the written and notarized consent of your spouse. If You are Not Married If you are not married, the normal method of payment is the Single Life Annuity Option. You will receive a monthly pension benefit for the rest of your life. At your death all payments will stop. January 2011 Page 18

19 Optional Forms of Payment Besides the two normal methods of payment, described above, the Plan offers a number of additional optional forms of benefit payment. You and your spouse or beneficiary should understand the provisions of each option to decide which one best suites your needs. There is no single option that is best for every employee. Important terminated vested employees are not eligible to elect optional forms of payment; they must select one of the two normal payment forms mentioned on page 18 If you are married, your spouse must agree in a notarized, written statement if you want to receive payment in a form that is other than the Automatic Joint & Surviving Spouse Benefit Option. A few things to consider when reviewing the pension options are: Your financial assets and liabilities The financial needs of your surviving spouse or beneficiary Your family health history or other factors that might impact your life expectancy or the life expectancy of your spouse or beneficiary, and Your spouse s or beneficiary s pension and other sources of retirement income, if any. You can elect an optional form of benefit payment that will guarantee your surviving spouse or beneficiary a monthly income for life. The greater amount of income you wish to provide your spouse or beneficiary, the greater the reduction you will experience in your monthly pension. You and your spouse must decide which option is best for you. Joint and Survivor Annuity Option Under this option, the amount you receive during your lifetime is less than the amount you would receive as a Single Life Annuity. The amount of the reduction depends on the age of both you and your Beneficiary and on the percentage to be continued after your death. Based on the option you elect, either, 25%, 50%, 75% or 100% of the amount you receive will be paid to your designated Beneficiary upon your death. This will be paid to your beneficiary as long as he or she lives. If your Beneficiary predeceases your, the reduction to your monthly benefit will not change. Joint and Survivor Annuities With Pop Up Under this option, the amount you receive during your lifetime is less than the amount you would receive as a Single Life Annuity. The amount of the reduction depends on the age of both you and your Beneficiary and on the percentage to be continued after your death. Based on the option you elect, either 25%, 50%, 75% or 100% of the amount you receive will be paid to your designated Beneficiary upon January 2011 Page 19

20 your death. This will be paid to your beneficiary as long as he or she lives. If your Beneficiary predeceases you, your monthly benefit will revert back (or pop-up ) to your Single Life Annuity amount. Selecting the pop-up feature will result in a greater reduction in your benefit. Level Benefit Option Under the Level Benefit Option, your early retirement benefit will be actuarially adjusted to provide, as nearly as can be estimated, a constant level of total income Company pension and Social Security to the employee, both before and after you begin to receive unreduced Social Security. The monthly Primary Social Security benefit you become entitled to receive at Social Security Full Retirement age (age 65), based upon the Social Security Act in effect at your early retirement, will be included in the calculation of the Level Benefit. As with the Full Pension Option, all payments cease upon your death. Period Certain Annuity Option This payment method provides a reduced monthly annuity for your lifetime with a maximum guaranteed period (5, 10 or 15 years) for your Beneficiary. If you die before receiving all payments for the period you elected, your Beneficiary will receive the remaining payments. If your Beneficiary predeceases you, you may designate someone else, even if your benefit has already commenced, if you are within the term of period you elected. If you die after the selected payment period ends (5, 10, 15 years), no further benefits will be paid. If both you and your Beneficiary die before the selected payment period ends, your estate or your Beneficiary s estate will receive a single payment based on the value of remaining payments. Notice Requirements to Elect an Option You are asked to give between 60 and 90 days notice of your retirement to allow time to calculate all of the available options and set up a retirement session that fits into your, and, if necessary, your spouse s schedule. This also allows time to provide you with an estimate of the options for your review before your retirement session. How You Elect a Retirement Option Once you have reviewed and understand the options available, you must complete a Pension Election Option Form prior to the Benefit Commencement Date. Regardless of the option selected, you must indicate the effective date of your option and beneficiary information if required. Spousal Consent Your election of an optional form of benefit payment must be confirmed in writing. If you are married, spousal consent must be provided if an option other than the Automatic Joint and Surviving Spouse Benefit is selected. The spousal consent must: Be made in writing, January 2011 Page 20

21 Be signed within the 90-day period ending on the Benefit Commencement Date in the presence of a Plan Representative or Notary Public, and Agree to the option elected and/or any alternate beneficiary. Effective Date of Option All the options become effective on the Benefit Commencement Date (provided that prior notice requirements have been met). Change of Option You have the right to change your election as to the method of pension payment up to the date of the commencement of your Pension benefit. As soon as payment of benefits begins, you may NOT change your benefit election at any time for any reason. If you are married, spousal consent must be obtained to change the elected option. Your spouse s consent must be obtained, or the right to consent must be waived, within the 90-day period ending on the Benefit Commencement Date. You may change the percentage (25%, 50%, 75% or 100%) of a Joint and Survivor Annuity Option at any time before the effective date of the option. To change the percentage, you must revoke the option and elect a new option with the new percentage in the manner described above. Change of Beneficiary You may change the beneficiary of a Joint and Survivor Annuity Option at any time before the effective date. To change the beneficiary, you must first revoke the option and elect a new option with a new beneficiary in the manner described above. Your spouse s consent must have been obtained, or the right to consent must be waived, within the 90-day period ending on the Benefit Commencement Date. However, after the effective date, the option you elected or the beneficiary designated for any of the Joint and Survivor Annuity Options may not be changed. Death of Beneficiary If the beneficiary dies before the Benefit Commencement Date, the option is automatically revoked, and the employee may elect a new optional form of benefit payment and/or beneficiary with consent if necessary. If the beneficiary of a Joint and Survivor Annuity Option dies after the Benefit Commencement Date, the employee s pension continues unchanged. If the beneficiary of a Joint and Survivor with Pop Up Annuity Option dies after the Benefit Commencement Date, the employee s pension reverts back to the Single Life Annuity amount. January 2011 Page 21

22 Survivor Benefits Note: Italicized expressions are defined in the section Important Terms Under the Plan, beginning on page 25. Eligibility to receive Survivor Benefits under the Plan depends on a number of key factors: Whether you are: married at the time of your death, an active employee, a totally and permanently disabled employee or a retiree who has not yet commenced payment of your pension benefit, or a vested employee who terminated employment before becoming eligible to retire If You Die Before You are Vested If you die before you are vested, your survivors are not entitled to a benefit from the plan. If You are Vested and Die as an Active Employee or as a Retiree Before your Benefit Commencement Date For purposes of eligibility for Survivor Benefits described below, you must be an active employee or an employee who has retired and deferred commencement of your pension benefit. An active employee includes: a vested employee of a Participating Company or a Participating Union that has negotiated a preretirement survivor benefit who is actively performing the duties of his/her regular employment for the Company or an employee of a Participating Company who has 10 or more years of service and has been determined to be permanently and totally disabled under the FE LTD Plan. IMPORTANT: Effective January 1, 2005, unmarried active employees may designate a beneficiary. If you are vested, unmarried and eligible to choose a Beneficiary, you must affirmatively elect this option by completing the appropriate Beneficiary election form. If you do not complete and submit the appropriate form, no Beneficiary election will be deemed to have been made and, if you should die as an active employee, no benefit will be paid. You may obtain a copy of the appropriate form by contacting the Human Resource Service Center. January 2011 Page 22

23 Pre-Retirement Survivor Annuity Married Employee If you have been married for at least 1 year and die as an active employee and you have completed at least 5 years, but less than ten years of eligibility service, your surviving spouse will be eligible for the Pre-Retirement Survivor Annuity. The amount of the benefit is equal to 55% (actuarially unreduced); of your benefit calculated as though you had terminated employment on the day before your death. The benefit is payable the first day of the month following the date of your death or the date that you would have attained age 65, whichever is later. Pre-Retirement Survivor Annuity Unmarried Employee* If you die as an active employee and you have completed at least 5 years, but less than ten years of eligibility service, your designated Beneficiary, (if you are eligible, and have completed the appropriate forms to name a Beneficiary), will be eligible for the Pre-Retirement Survivor Annuity. The amount of the benefit is equal to your benefit calculated as though you had terminated on the day before your death with a 100% Joint and Survivor Annuity option in effect. In the event that the death benefit for your beneficiary can not be determined using the 100% Joint and Survivor option due to a large variance in ages, your beneficiary s benefit will be determined as if you had elected the maximum Joint and Survivor Annuity Option (75% or 50%) permitted by law. The benefit is payable the first day of the month following the date of your death or the date that you would have attained age 55, whichever is later. Benefits will be reduced for early payment based on the applicable early retirement reduction factors (Please see page16). * Or have been married less than 1 year Pre-Retirement Survivor s Benefit Married Employee If you have completed at least ten years of eligibility service and you die as an active employee or a retiree whose pension benefit has not commenced, your spouse will be eligible for the Pre-retirement Survivor s Benefit. The amount of the benefit is equal to your benefit calculated as though you had retired on the day before your death with a 55% (actuarially unreduced) Joint and Survivor Annuity option in effect. The benefit will be payable on the first of the month following the date of your death or the date that you would have attained age 55, whichever is later. Early retirement reductions will apply, but the maximum reduction will be that allocated for an age 55 early retirement. January 2011 Page 23

24 Pre-Retirement Survivor s Benefit Unmarried Employee* If you have completed at least ten years of eligibility service and you die as an active employee or a retiree whose pension benefit has not commenced, your designated Beneficiary (if you are eligible, unmarried and have completed the appropriate forms to name a Beneficiary) will be eligible for the Preretirement Survivor s Benefit. The amount of the benefit is equal to your benefit calculated as though you had retired on the day before your death with a 100% Joint and Survivor Annuity option in effect. In the event that the death benefit for your beneficiary can not be determined using the 100% Joint and Survivor option due to a large variance in ages, your beneficiary s benefit will be determined as if you had elected the maximum Joint and Survivor Annuity Option (75% or 50%) permitted by law. The benefit will be payable on the first of the month following the date of your death. Early retirement reductions will apply, but the maximum reduction will be that allocated for an age 55 early retirements, please see page 13 * Or have been married less than 1 year If You Die After You Have Left the Employment of the Company If you are vested and die after you leave employment of the Company but before you are eligible to retire, your spouse can receive monthly payments beginning as early as the date you would have reached age 55 or as late as the date you would have reached age 65. The amount of the benefit will be based on your vested benefit at termination, and paid as if you had retired on the day before your death with a 55% (actuarially unreduced), if hired before January 1, 2002, or 50% (actuarially reduced), if hired on or after January 1, 2002 but before January 1, 2005 Joint and Survivor Annuity option in effect. Benefits will be reduced for early payment based on the applicable reduction factors for a vested deferred benefit (please see page 16.) and the date that your Beneficiary elects to commence the payment of benefits. PLEASE NOTE: Even if you were unmarried and filled out the appropriate pre-retirement survivor form as an active employee, once you leave before becoming eligible to retire, that election terminates on the last day of your employment with the Company. No pre-retirement survivor benefit will be payable to any beneficiary other than a surviving spouse if you leave the Company before you are eligible to retire. If You Die After Commencement of Pension Benefits If you die after your pension benefits begin, benefits will cease or continue to your pension Beneficiary based on the pension option you elected. January 2011 Page 24

25 Important Terms Under the Plan The following terms have a specific, technical meaning when used in connection with the Plan. Beneficiary For active married employees, your Beneficiary is always your spouse prior to your Benefit Commencement Date. For retirees, a Beneficiary is the legal spouse or other designated Beneficiary of a retiree at the time benefit payments begin. Restrictions apply to certain methods of payment if the difference in ages between the retiree and non-spouse Beneficiary is too great. If you are married, your spouse must agree in a written statement which is either notarized or witnessed by an authorized Company HR representative if you want to receive payment in a form that is other than the 55% Joint and Surviving Spouse Annuity. Your Beneficiary is referred to as an Annuitant. Benefit Commencement Date The date that the first payment of your pension benefit is paid to you, your surviving spouse or, if applicable, your surviving beneficiary. Credited Eligibility Service For purposes of the Career Pay Benefit Formula, Credited Eligibility Service is each year in which you are an active employee or on an authorized leave of absence in which you work at least 1,000 hours or service with at least one hour of service in each month. Credited Eligibility Service is used to determine your eligibility to receive benefits and is credited from your date of hire. Earnings The term earnings is used extensively throughout this document. However, its definition varies depending on the formula to which it applies to (see below). Regardless of the formula(s), earnings reflect amounts before taxes or qualified benefit plan contributions are withheld. However, in no case will any amount exceed the federal statutory limits (as adjusted by the Secretary of the Treasury). January 2011 Page 25

26 Credited Career Earnings The Career Earnings used in the Career Earnings Formula generally reflect your total earnings during your employment. Career Earnings includes salary or wages, overtime pay, shift premiums, annual incentive awards and other similar compensation during your employment. Plan The Toledo Edison Company Bargaining Unit Retirement Plan for FirstEnergy Employees Represented by IBEW 245 Plan Year The Plan Year is the 12 consecutive month period beginning with January 1 and ending the following December 31. January 2011 Page 26

27 Administration of the Plan Claiming Benefits If you plan to retire, inform your supervisor and the Human Resources Coordinator at your location no more than 90 days in advance of your Benefit Commencement Date. Your coordinator will help you complete the necessary forms and arrange for pension estimates and options to be calculated. After receiving this information, your coordinator will schedule a retirement interview to explain your retirement benefits in detail. Pensions are paid monthly. Your monthly benefit will be deposited in the savings or checking account of your choice. You will receive your first pension benefit payment as soon as administratively possible following the date you retire. For example, if you retire January 1, your first benefit payment may be February 1 to allow for all applicable earnings to be recorded. Your first payment may be double your regular monthly amount. After the first payment, you will receive your regular monthly benefit each month. Deferred Pension Benefits To begin receiving your pension benefit if you elected to defer your benefit at the time of your retirement, return the copy of the application to commence benefits given to you at the time of your retirement interview. If you no longer have this application, you should notify the FirstEnergy Retirement Board or your local Human Resources office to advise them that you wish to begin receiving your pension benefits and the date on which you would like them to start. You should allow for a maximum of 90 days between your notification and the actual Benefit Commencement Date. If You No Longer Work for the Company If you no longer work for the Company, but are vested and eligible for a pension benefit, the FirstEnergy Retirement Board will contact you just prior to your attaining age 65 in order to arrange the commencement of your vested pension benefit. If you wish to receive your pension benefit prior to age 65, you may return a copy of the documents provided to you when you left the Company s employment; or you may send a letter to FirstEnergy Retirement Board (using the address provided on page 37) advising them that you wish to commence pension benefits and the date on which you would like them to start. You should notify the Retirement Board no more than 90 days before your actual Benefit Commencement Date. Submitting and Appealing Your Claim By law, your claim (and requests for an appeal of a denied claim) must be evaluated and processed within a certain period of time. All claims must be filed with, and will be decided by, the Plan Administrator within the specified time frame. All appeals of a denied claim or other adverse benefit determination must be filed with, and will be decided by, the Plan Administrator within the specified time frame. As January 2011 Page 27

28 shown in the following chart, the timeline for claims for distributions due to Disability is different from the timeline for other claims January 2011 Page 28

29 Pension Plan Claim Review Time Limit Chart Deadline All Claims Except Disability Claims for Disability Retirement Notice of Initial Claim Denial Completion of Claim (if necessary) 90 days after receiving the initial claim 45 days after receiving the initial claim 180 days after receiving the claim if Plan Administrator needs extension for special circumstances and if Plan Administrator provides an extension notice during initial 90-day period Not applicable 75 days after receiving the claim if Plan Administrator needs more information and if Plan Administrator provides an extension notice during initial 45-day period 105 days if Plan Administrator needs another extension 45 days after receiving extension notice Appeal Claim Decision 60 days after receiving claim denial 180 days after receiving claim denial Plan Decision on Appeal 60 days after Plan Administrator receives appeal 120 days after Plan Administrator receives appeal if Plan Administrator needs an extension 45 days after Plan Administrator receives appeal 90 days after Plan Administrator receives appeal if special circumstances require an extension (notice will be given within the initial 45-day period) As indicated by the foregoing chart, special circumstances may warrant an extension of time for reviewing the claim or appeal. In that case, the Plan Administrator will notify you in writing prior to the extension. The notice will include the reason for the delay and the date by which the Plan Administrator expects to render a decision. Extension notices for claims for a distribution due to Disability will explain the unresolved issues preventing a decision and describe the additional information needed to resolve those issues. If the extension is based on your failure to provide required information, the period for making a benefit determination will be counted from the date on which you are sent the extension notification to the date you respond to the request for additional information. Claim Denial Notice If your original claim for benefits under the Plan is wholly or partially denied by the Plan Administrator, including any other adverse benefit determination, the claim denial notice will: state the specific reasons for the denial; refer to the specific Plan provisions on which the denial is based; January 2011 Page 29