Diocese of San Diego RESTATED PENSION PLAN FOR LAY EMPLOYEES SUMMARY PLAN DESCRIPTION FOR EMPLOYEES OF THE DIOCESE OF SAN DIEGO Effective January 1, 2008 Diocese of San Diego P.O. Box 85728 San Diego, CA 92186-5728 Revised 9/11
Diocese of San Diego RESTATED PENSION PLAN FOR LAY EMPLOYEES Table of Contents INTRODUCTION... 1 SECTION I PLAN ADMINISTRATION What is the name of the Plan?... 2 What type of Plan is it?... 2 What is the purpose of the Plan?... 2 What is the effective date of the Plan?... 2 Who sponsors the Plan for employees of San Diego Diocese?... 3 Who administers the Plan?... 3 Where is the money deposited?... 3
San Diego SECTION II PARTICIPATION IN THE PLAN How do I become a participant in the Plan?... 4 SECTION III CONTRIBUTIONS Am I required to contribute to the Plan?... 4 Are my contributions made before September 1, 2000 credited with interest?... 4 What happens to the money I contributed to the Plan prior to September 1, 2000?... 4 Can I withdraw my contributions (with interest) That I made prior to September 1, 2000 from the Plan while I am still employed?... 5 Do I have to pay taxes on my contributions That were made prior to September 1, 2000 When I withdraw them from the Plan?... 5 SECTION IV EARLY TERMINATION What if I terminate employment before I am eligible to retire?... 6
SECTION V RETIREMENT DATE AND PLAN BENEFITS When can I retire?... 8 How do I file for benefits?... 8 What are my benefit payments based on?... 8 What is the amount of benefit that I earn?... 9 Can you give me an example of how to estimate my pension at age 65?... 10 How much will I receive if I elect to retire before age 65?... 11 How much will I receive if I delay retirement until after age 65?... 12 How will I be paid?... 12 Do I have a choice of how my benefit will be paid to me?... 12
San Diego SECTION VI DISABILITY AND DEATH What happens if I terminate employment because of disability?... 14 What if I die before retirement?... 14 What if I die after retirement?... 14 SECTION VII BENEFIT LIMITATIONS Is the amount of my benefit limited by law?... 15 SECTION VIII PROTECTION OF YOUR BENEFIT Is it possible that any part of my benefit may be forfeited?... 15 What if the Plan is discontinued or terminated?... 16 Can my benefit be transferred or attached?... 16 Can I borrow against my contributions?... 16
SECTION IX MISCELLANEOUS Do I have to provide any information before I am paid a monthly pension?... 17 If I transfer to another school or institution within the Diocese, is it considered a termination of employment?... 17 What happens if there is an error or misstatement in my benefit record?... 17 SECTION X TOP-HEAVY PROVISIONS What is a Top-Heavy Plan?... 18 What happens if the Plan is Top Heavy during a Plan Year?... 18 SECTION XI LEGAL NOTICES... 19
San Diego INTRODUCTION The Diocese of San Diego has established a Retirement Plan to help you achieve financial security in your retirement years. The information contained in this booklet tells you how the Plan is administered. Every attempt has been made to explain the Plan's benefits and rights carefully and accurately. However, if there are any inconsistencies between this summary and the actual Plan documents, the Plan documents will govern. You should review this booklet carefully to understand how the Plan operates. If after reading the following pages you still have questions, you can contact your payroll office for assistance. - 1 -
SECTION I PLAN ADMINISTRATION What is the name of the Plan? The name of the Pension Plan is Diocese of San Diego Restated Pension Plan for Lay Employees. The Plan is identified by giving it the number 002. The records of the Plan are kept on a calendar year basis of January 1 through December 31. What type of Plan is it? The Plan is known as a defined benefit pension plan, and is considered a qualified plan by the Internal Revenue Service (IRS). Under this type of plan, benefits are paid in accordance with a specified formula based on your salary and Years of Participation in the Plan. What is the purpose of the Plan? The Plan s purpose is to provide you with a monthly income for your lifetime after you retire. The monthly pension paid from the Plan is in addition to any Social Security benefits you may receive. What is the effective date of the Plan? The Plan became effective on September 1, 1967. However, the Plan has been changed several times since that date to improve benefits and to comply with federal legislation. - 2 -
San Diego Who sponsors the Plan? The Diocese of San Diego sponsors the Plan and can be contacted at the following address and telephone number: Roman Catholic Diocese of San Diego Department of Human Resources P. O. Box 85728 San Diego, CA 92186-5728 Telephone (858) 490-8200 EIN: 95-1644613 Who administers the Plan? The Plan is administered by The Epler Company, which serves as the Plan Administrator. As the Plan Administrator, The Epler Company has been given an Employer Identification Number (EIN) by the IRS and that number is 95-3024851. The Plan Administrator can be contacted at the following address and telephone number: 450 B Street, Suite 750 San Diego, CA 92101-8002 Telephone (619) 239-0831 Where is the money deposited? The Diocese makes contributions to Union Bank of California for the purpose of paying Plan benefits. Union Bank of California also serves as Trustee for the Plan. The funds are invested by various independent professional investment managers. - 3 -
SECTION II PARTICIPATION IN THE PLAN How do I become a participant in the Plan? If you are a lay employee of the Diocese of San Diego, effective September 1, 2000, you will automatically be enrolled in the Plan provided you work at least 20 hours a week. SECTION III CONTRIBUTIONS Am I required to contribute to the Plan? No. Effective September 1, 2000, no contributions are required or permitted for lay employees of the San Diego Diocese. Are my contributions made before September 1, 2000 credited with interest? Yes. Your contributions currently earn 7% interest annually. All interest is compounded annually. What happens to the money I contribute to the Plan prior to September 1, 2000? Your contributions, and the contributions made by the Diocese, will remain on deposit with the Union Bank of California for investment purposes. - 4 -
San Diego Can I withdraw my contributions (with interest) that I made prior to September 1, 2000 from the Plan while I am still employed? No. Your employee contributions and interest can only be withdrawn when you terminate employment, become disabled, die or retire. Please refer to SECTION IV and V for additional information. Do I have to pay taxes on my contributions that were made prior to September 1, 2000 when I withdraw them from the Plan? No. However, any distribution of interest or Diocesan funds before retirement (whether normal or early), disability or death will result in the usual withholding plus a 10% tax. This tax is avoided by rolling over the interest on your contributions (excluding your contributions) and Diocesan funds into an IRA. - 5 -
SECTION IV EARLY TERMINATION What if I terminate employment before I am eligible to retire? If you participated in the Plan and are entitled to receive a monthly benefit, you may elect to leave your contributions (and interest), if any, in the Plan, and receive a monthly pension at your Normal Retirement Date. However, if the amount due you never exceeded $5,000, it will be paid to you in a lump sum payment upon termination. The amount of your benefit will be calculated as of the date of your termination and in the same way as the Normal Retirement benefit described on page 9. If you participated for less than 5 years, you may receive a percentage of the Diocese provided benefit, depending upon when you first joined the Plan. The percentage is as follows: Years of Participation If participation began before September 1, 2000 Vested Percentage Less than 1 year 0% 1 year but less than 2 20% 2 years but less than 3 40% 3 years but less than 4 60% 4 years but less than 5 80% 5 or more years 100% - 6 -
San Diego If participation began September 1, 2000 or after Years of Participation Vested Percentage Less than 5 years 0% 5 or more years 100% You are always 100% vested in the contributions you made prior to September 1, 2000 and the interest on your contributions. The payment of your benefit will begin at your Normal Retirement Date. However, if you participated in the Plan for at least 5 years before you terminated, you can choose to have your pension begin at age 55, as described on page 11. The monthly amount will be reduced because you will be receiving payments earlier and for a longer period of time. You may elect to receive your contributions, if any, plus interest, in one lump sum. However, if you choose this payment, your monthly pension payable at retirement will be actuarially reduced to reflect this refund. - 7 -
SECTION V RETIREMENT DATE AND PLAN BENEFITS When can I retire? You can retire on any one of the following dates: Normal Retirement on the first day of the month in which you reach age 65. Early Retirement on the first day of any month after you reach age 55 and complete 5 Years of Participation in the Plan. Late Retirement on the first day of any month after you reach age 65. How do I file for benefits? To claim your benefits, you should contact the payroll office or Plan Administrator for the necessary forms and procedures. What are my benefit payments based on? The amount of your monthly pension is based on your Final Average Monthly Earnings (FAME) and Years of Participation in the Plan, as follows: FAME is the monthly average of your total salary paid to you during the 5 consecutive Years of Participation when your salary was the highest. Years of Participation while you are a participant in the Plan, for each year or partial year of your continuous, full-time employment, you earn a year or partial Year of Participation (full-time means at least 20 hours per week). - 8 -
San Diego For each year that you participate in the Plan, you earn credit toward a pension benefit. At your retirement, the total benefit you receive is determined by your FAME and total Years of Participation. What is the amount of benefit that I earn? The monthly amount of your benefit to be paid at age 65 is the sum of (a), (b) and (c): a. Provided you were participating in the Plan on September 1, 1974, you will receive $2 for each full Plan Year of employment up to September 1, 1974, plus b. For each Year of Participation you will earn 2% of your FAME, plus c. $2 times your Years of Participation. If the monthly benefit you earned as of August 31, 1986 plus $7.50 per Year of Participation after September 1, 1986 produces a larger amount, you will receive this amount. - 9 -
Can you give me an example of how to estimate my pension at age 65? Assume John Jones is hired on September 1, 1971 at age 27 and became a participant immediately. On September 1, 2009, Mr. Jones is age 65 and retires. Mr. Jones benefit would be calculated as follows: I. Monthly benefit from Plan as of September 1, 1974: $2 x 3 years of service = $ 6.00 II. III. Benefit for years of participation from hire date to September 1, 2009. Assume Mr. Jones highest average Monthly salary is $2,400. $2,400 x 2% x 38 years = 1,824.00 $2 per Year of Participation $2 x 38 = 76.00 Total monthly benefit at age 65 (sum of I, II and III) $1,906.00 Remember that your pension benefit will be based upon the 5 consecutive years that your salary was the highest! - 10 -
San Diego How much will I receive if I elect to retire before age 65? You will receive the benefit you earned up to your early retirement date, but this benefit will be reduced because it will be paid earlier and for a longer period than if you retired at age 65. Assume Susan Smith is hired on September 1, 1984 at age 30 and becomes a participant immediately. On September 1, 2009, Ms. Smith is age 55 and retires. Ms. Smith s benefit would be calculated as follows: I. Monthly benefit from Plan before September 1, 1974: $2 x 0 year of service = $ 0.00 II. Benefit for Years of Participation from hire date to September 1, 2009. Assume Ms. Smith s monthly salary is as shown below, Ms. Smith s FAME would be determined as follows: 9/1/06-8/31/09 ($2,300 x 12 x 3) $ 82,800 9/1/04-8/31/06 ($2,100 x 12 x 2) 50,400 $133,200 60 $ 2,220 $2,220 x 2% x 25 = $1,110.00 III. $2 per Year of Participation $2 x 25 = 50.00 Total monthly benefit at age 65 (sum of I, II and III) $1,160.00 Estimated early payment factor x.3652 Total monthly benefit at age 55 $ 423.63-11 -
How much will I receive if I delay retirement until after age 65? You will receive a larger benefit than you would have received at age 65, because your benefit will be paid later or over a shorter period of time. This increase is called an actuarial increase. You will receive the greater of your service accrual or the actuarial increase to reflect the shorter payment period. How will I be paid? Normally, you will receive a monthly check for your lifetime with a minimum guarantee of the refund of your contributions plus interest, if any. Payments will start on the first day of the month on or next following the date you retire. Do I have a choice of how my benefit will be paid to me? Instead of a lifetime monthly income, you can select another form of payment. Each of the optional forms will produce a different monthly benefit amount, but they are equivalent in value. Your options are: Life Annuity with Payments for 10 Years Certain This form guarantees that you will receive a monthly payment for your lifetime, but a minimum of 120 monthly payments will be made. This means that if you should die before 120 monthly payments have been made, the remainder of the 120 payments will be made to your beneficiary. - 12 -
San Diego Joint and Survivor Annuity This form guarantees that monthly payments will continue for your lifetime and, in the event of your death, for the lifetime of your surviving spouse at retirement date. If you choose this option, you can elect to have 50% or 100% of your monthly payments continued to your surviving spouse. 10 Year Certain Only This form guarantees that you will receive a monthly income for exactly 120 months. In the event of your death before 120 payments have been made, the remainder of the 120 monthly payments will be made to your beneficiary. After 120 payments have been made, all payments stop and no further benefits are due. Upon enrollment, you should designate a beneficiary, using a form which the Plan Administrator will supply. You may later change your beneficiary by filing a new form. It is important to keep the Plan Administrator informed of any changes in your beneficiary's name or address. - 13 -
SECTION VI DISABILITY AND DEATH What happens if I terminate employment because of disability? If your termination of employment is a result of total and permanent disability, your benefits will be paid in accordance with the termination of employment or the retirement sections of this booklet, whichever applies to you. An employee's disability status must be certified in writing by a competent medical authority. What if I die before retirement? If you die while covered under the Plan and before you terminate employment, your beneficiary will receive 100% of the actuarial equivalent of the benefit you accrued up to your death. What if I die after retirement? If you should die after terminating employment but before the date payments actually begin, your beneficiary will receive the actuarial equivalent of the benefit you had accrued up to your date of termination. If you die after payment of your benefit begins, the death benefit payable (if any) will be in accordance with the form of pension you elected at retirement. - 14 -
San Diego SECTION VII BENEFIT LIMITATIONS Is the amount of my benefit limited by law? Yes, ERISA (Employee Retirement Income Security Act of 1974) limits the annual benefit which can be paid by the Plan. The maximum annual dollar benefit for 2009 is $195,000. This amount is adjusted each year by the Internal Revenue Service. In the event you participate in other qualified plans maintained by the Diocese, the plans are combined for these limitation purposes. SECTION VIII PROTECTION OF YOUR BENEFIT Is it possible that any part of my benefit may be forfeited? You are always fully vested in your personal contributions, plus interest, to the Plan, and these can never be forfeited. However, you will not have earned a vested interest in any Plan benefits attributable to contributions made on your behalf by the Diocese until you have completed the minimum of years to obtain ownership of Diocesan contributions. Please refer to the vesting schedules on pages 6 and 7. If you withdraw your personal contributions (if any), your accrued benefit is reduced to reflect the value of that withdrawal. - 15 -
What if the Plan is discontinued or terminated? Although the Diocese has the right to amend or terminate the Plan at any time, no amendment may reduce your vested accrued benefit under the Plan. Also, until all Plan liabilities have been satisfied, no amendment can allow Plan funds to be used for any purpose other than the exclusive benefit of Plan participants and their beneficiaries. In the event the Plan is terminated, you will become 100% vested in your benefit accrued to the date of termination of the Plan. Can my benefit be transferred or attached? Your benefit is not transferable or assignable, except for certain family support obligations and cannot be pledged as collateral for a loan. The Plan has been written to provide maximum protection against attachment. Your benefit cannot be attached for unpaid debts. Can I borrow against my contributions? No, loans are not permitted by the Plan. Your Contributions that were made prior to September 1, 2000 can only be withdrawn when you terminate employment, become disabled, die or retire. - 16 -
San Diego SECTION IX MISCELLANEOUS Do I have to provide any information before I am paid a monthly pension? Yes, you must provide proof of age before any monthly benefits are paid. Acceptable proof of age includes a copy of your birth certificate, infant baptismal certificate, passport, a life insurance policy over 10 years old, or naturalization papers. If you elect to have payments continue to your spouse, proof of your spouse's age must also be provided. If I transfer to another school or institution within the Diocese, is it considered a termination of employment? No, in order to have a bonafide termination of employment, there must be a complete severance of all duties from the Diocese. What happens if there is an error or misstatement in my benefit record? If it is found that there has been a misstatement of fact about your age, years of participation, salary, or any other relevant factor used to determine the amount of pension benefit, the benefit will be recalculated in accordance with the provisions of the Plan on the basis of your true age, years of participation, salary or any other relevant factor. - 17 -
SECTION X TOP-HEAVY PROVISIONS What is a Top-Heavy Plan? If a few key employees (such as officers) have earned a large percent of the benefits, the Plan may become "Top Heavy," as defined by federal regulation. Whether or not a Plan is Top Heavy is determined on a Plan Year-by-Plan Year basis, and applies only to Plan Years after September 1, 1984. What happens if the Plan is Top Heavy during a Plan Year? You will be notified if the Plan becomes Top Heavy during a Plan Year. Certain provisions will automatically become effective: a) Annual earnings in excess of $170,000 cannot be used in determining benefits. b) A special minimum benefit will apply during each year in which the Plan is Top Heavy. c) The following vesting schedule will apply for the years that the Plan is Top Heavy: Percentage Years of Participation Vested Less than 2 years 0% 2 year but less than 3 20% 3 years but less than 4 40% 4 years but less than 5 60% 5 years but less than 6 80% 6 or more years 100% - 18 -
San Diego SECTION XI LEGAL NOTICES The explanation of our Pension Plan, in this booklet as amended effective January 1, 2008, is conditioned on the approval of the Plan by the IRS. If the IRS requires changes which affect this Plan, you will be advised of the changes. This summary replaces any former summary and applies to all active employees as of January 1, 2008. Former participants and retirees will be governed by the Plan provisions at time of termination or retirement, unless otherwise stated. - 19 -