Contribution Account Benefit

This section explains the benefit you earn for your covered employment in 1987 and later under the contribution account benefit formula.

Important Topics

Contribution Account Benefit Formula
Contributory Service Benefit
Years of Service
Your Contributory Service Benefit
Past Employment
Special Limitations
Non-Contributory Service Benefit
Intermediate Employment

Contribution Account Benefit Formula

Your contribution account benefit is based on your covered employment after 1986 up to your pension effective date. You earn a percentage of all the basic contributions covered employers make for your covered employment after 1986.

If you join the Plan in 1987 or later, all your retirement benefits are calculated under the contribution account benefit formula explained in this section.

If you joined the Plan before 1987, your benefits are earned under two different formulas: The five-year average benefit earned for your covered work through 1986 (explained in the Five-Year Average Benefit section) and the contribution account benefit earned for your covered work in 1987 and later (explained in this section).

Under the contribution account benefit formula, you earn a monthly retirement benefit based on a percentage of the basic contributions your employers make for all your contributory service (covered hours) after 1986. This is called your contributory service benefit.

In most cases, your contribution account benefit equals your contributory service benefit. However, if you first join the Plan after 1986, you may also qualify for a non-contributory service benefit based on your employment before you entered the Plan.

Or, if you rejoin the Plan after 1986 as part of a new bargaining unit, you may qualify for a non-contributory service benefit based on your employment between your two periods of covered employment (see Non-Contributory Service Benefit Based on Intermediate Employment).

If you qualify, your contribution account benefit equals the total of your contributory service benefit plus your non-contributory service benefit.

There is no maximum to the benefit you can earn under the contribution account benefit formula. Your benefit grows each month that your employer makes contributions to the Pension Trust on your behalf.

The Internal Revenue Service does place a maximum on the total monthly benefit you can receive from this Plan. See Federal Limit on Benefit Amounts where this limit is discussed.

All basic contributions your employer makes for your covered work count toward your monthly pension. But remember to check if your collective bargaining agreement limits the number of hours your employer is required to contribute on your behalf. 

Page Top link

Contributory Service Benefit

Beginning in 1987, you earn a contributory service benefit that is a percentage of all the basic contributions your employers make for your covered hours after 1986.

Benefit Percentages

Your contributory service benefit is calculated by multiplying all the basic contributions your employers pay into the Pension Trust for your covered employment in each calendar year after 1986 by the benefit percentage that applies to that year. The results from all of those years are then added together to arrive at your total contributory service benefit.

The benefit percentage is not the same for every year. The benefit percentage for some years depends on whether your covered employment in that year occurs during your first 20 years of service or comes after your first 20 years of service. Years of service are explained next.

Click here to see the specific benefit percentages that apply to each year of covered employment from 1987 forward.Page Top link

Years of Service

Your years of service are only used to determine when you cross the 20 years of service line. You cross that line at the end of your 20th calendar year of service.

You earn one year of service for:

  • Each calendar year that ends during your period of unbroken past employment, up to a maximum of 10 years. Click here for details.
  • Each calendar year of vesting service that ends on or after your first covered hour under the Plan. Click here for details.

You cannot earn more than one year of service during a calendar year.

Although only basic employer contributions for your covered employment after 1986 count when calculating your contribution account benefit, all your years of service—before and after January 1, 1987—count when adding up your years of service. This also includes years of vesting service you earn based on non-covered employment.

Click here for an example of how to determine your years of service.Page Top link

Calculating Your Contributory Service Benefit

Your contribution account benefit is based on all your covered employment after 1986 up to your date of retirement.

Remember, if you joined the Plan before 1987, your retirement benefit is based on the combined total of your contribution account benefit and your five-year average benefit (explained in the Five-Year Average Benefit section).

Table 2 gives you an easy way to estimate the monthly benefit you can earn each year based on the basic contribution rate that applies to your covered hours during that year (as listed in your collective bargaining agreement).

To calculate your contributory service benefit, you need to know the following:

  • Total Covered Hours—How many covered hours did you work in a year?
  • Pension Rate—What is your basic pension contribution rate during the year?
  • Benefit Percentage—What is the benefit percentage for the year?

Click here for three steps that show how a contributory service benefit is calculated.

Your basic contribution rate is set in your collective bargaining agreement. It does not include supplemental PEER contributions that your employer may be required to make. See Types of Contributions for more information. Most contracts have monthly or yearly maximums on employer contributions. See Covered Hours for more information.

Click here for an example that shows how a contributory service benefit is calculated. Page Top link

Past Employment

Certain work performed before you first become covered by the Plan (called past employment) may count when calculating your retirement benefit. If you qualify, your unbroken past employment is used to calculate either of the following:

  • Non-contributory service benefit under the contribution account benefit formula (if your first covered hour is in 1987 or later), or
  • Past service credits under the five-year average benefit formula (if your first covered hour is before 1987 (explained in the Five-Year Average Benefit section).

If you qualify, unbroken past employment can also count as years of service when determining your contributory service benefit (see Years of Service for more details).

Periods of self-employment (that is, employment as a sole proprietor or partner) do not qualify as past employment.

Your past employment does not count for vesting or protect you from a loss of Plan benefits.

Exception: In some cases, your hours of work before you first become covered by the Plan may count toward your vesting (see Special Vesting Rule for New Groups).

There are two types of past employment. You can qualify for either or both depending on your situation:

  • Continuous Past Employment
  • Special Past Employment
Continuous Past Employment

Continuous past employment is your unbroken employment with an employer before the employer starts making contributions to the Plan for your bargaining unit. To qualify, you must be a member of that bargaining unit when it becomes covered by the Plan, that unit must not have previously participated in the Plan and you cannot have any prior Plan coverage.

Your continuous past employment is broken if you worked less than 600 hours for the employer in any two consecutive calendar years after being hired. Your employment before the break will not count toward your continuous past employment. To help protect you from a break, each month you are away from work with the employer because of an approved leave of absence, qualified disability absence or qualified military leave counts as 50 hours of work.

You do not qualify for continuous past employment if you are a corporate officer at the time of your first covered hour or earlier.

Special Past Employment

Special past employment is your unbroken employment after age 30 in a bargaining unit represented by a Teamster local union located within the 13 Western states. To qualify, you cannot have any breaks between this employment and your covered employment and you cannot have any prior Plan coverage.

Your special past employment is broken if you did not work in this type of employment for more than 10 consecutive calendar months. Your employment before the break will not count toward your special past employment. To help protect you from a break, each month you are away from this type of employment because of a qualified disability absence or qualified military leave counts as a month of work.

Special past employment does not include any period of your work that already counts as continuous past employment.

If you are a corporate officer at the time of your first covered hour or earlier, you qualify for special past employment only if that period of past employment was covered by a collective bargaining agreement with a Teamster local union located within the 13 Western states.

You do not qualify for special past employment if you are in a bargaining unit represented by a Teamster local union outside the West at the time of your first covered hour.Page Top link

Special Limitations on Past Employment

Certain employee groups do not qualify for any past employment or their past employment may be limited. These groups and limitations are described below.

Employee Groups with No Past Employment

You do not qualify for any past employment if you are employed in one of the following groups at the time of your first covered hour:

  • An employee group represented by a Teamster local union outside the 13 Western states if the group has participated in another defined benefit pension plan. See chart below for details.
  • An employee group employed by a Teamster local union outside the 13 Western states.
Employee Groups with Limited or No Past Employment

You may not qualify for any past employment or your past employment may be limited if you are employed in one of the following groups at the time of your first covered hour:

  • An employee group represented by a Teamster local union outside the 13 Western states if the group has not previously participated in another defined benefit pension plan. If you are employed in one of these groups, you do not qualify for any past employment except as determined by the Trustees when the group is accepted into the Plan. See chart below for details.
  • An employee group that enters the Plan as a result of a certified change of collective bargaining representative, and benefit liabilities are transferred from another multiemployer pension plan to the Western Conference of Teamsters Pension Plan. If you are employed in one of these groups, you do not qualify for any past employment except as determined by the Trustees when the group is accepted into the Plan.
  • An employee group that was covered under the Plan at some time in the past, left the Plan and has been approved to rejoin the Plan. If you are employed in one of these groups, you do not qualify for any past employment except as determined by the Trustees when the group is accepted into the Plan.

Employee Groups Outside the West

Limitations on Past Employment

If you enter the Plan as part of a collective bargaining unit represented by a Teamster local union outside the 13 Western states, you may not qualify for any past employment or your past employment may be limited.

No Past Employment

If Unit Covered by Another Defined Benefit Pension Plan

Employees do not qualify for any past employment credit if the unit has been covered by another defined benefit pension plan, including:

  • Any Teamster multiemployer or Taft-Hartley defined benefit pension plan.
  • Any other multiemployer or Taft-Hartley defined benefit pension plan if the unit is participating in that plan while represented by a Teamster local union.
  • Any other defined benefit pension plan maintained by your employer (for example, a single employer or company plan) if the unit participates in that plan while represented by a Teamster local union.

This restriction only applies if the unit was covered under any of these types of defined benefit pension plans within five years of the date the unit first becomes covered under the Western Conference of Teamsters Pension Plan. This restriction does not apply to defined contribution plans such as a 401(k) plan.

Possible Past Employment

If Unit Not Covered by Another Defined Benefit Pension Plan

The Board of Trustees conducts an actuarial review of the unit to determine whether employees qualify for past employment. If the Board is satisfied the unit meets predefined actuarial benchmarks, employees qualify for continuous past employment under the rules described under Special Past Employment. If the unit does not meet these benchmarks, employees are not eligible for any past employment.

Note: Employees in these units cannot earn more than five years of non-contributory service based on their past employment. This limitation does not apply if the unit first became covered under the Plan before 2012.

Page Top link

Non-Contributory Service Benefit Based on Past Employment

If your first covered hour in the Plan is after 1986 and you qualify for past employment, you may be eligible for a non-contributory service benefit.

Your non-contributory service benefit is based on your total years and months of past employment. Click here to learn about past employment.

Eligibility

To qualify for a non-contributory service benefit based on past employment, you must meet all of the following conditions:

  1. Your first covered hour must be after 1986, and
  2. You must qualify for past employment, and
  3. You must complete at least one year of contributory service in a calendar year that ends after your first covered hour and before your 10th anniversary under the Plan.

If you are eligible for a non-contributory service benefit, you need to be familiar with two key terms:

  • Year of non-contributory service
  • Year of contributory service

Note: If you leave covered employment and rejoin the Plan after 1986 as part of a new bargaining unit, you may also be eligible for a non-contributory service benefit based on your intermediate employment. Click here for the rules that apply to this type of non-contributory service benefit based on intermediate employment.

Year of Non-Contributory Service

You are credited with one full year of non-contributory service for each full year of unbroken past employment. (You earn 1/12 of a year of non-contributory service for each full month of unbroken past employment.)

You cannot earn more than 10 years of non-contributory service and your years of non-contributory service can never be greater than the period of your unbroken past employment. Also, your total years of non-contributory service cannot be more than twice your total years of contributory service.

Put another way, every year of contributory service you complete converts two years of your unbroken past employment into years of non-contributory service. This is sometimes called the two-for-one rule.

For example, suppose you enter the Plan with nine years and two months of unbroken past employment. You leave the Plan having completed four years of contributory service. Under the two-for-one rule, you are limited to eight years of non-contributory service because that’s twice the number of your years of contributory service.

Continuing with this example, if you leave the Plan with five or more years of contributory service, you qualify for nine years and two months of non-contributory service. Under the two-for-one rule, your limit is either 10 years (twice the number of your five years of contributory service), or your total period of unbroken past employment, whichever is less. Remember, you can never qualify for more than 10 years of non-contributory service.

Note: In some cases, the maximum past employment you can earn toward your non-contributory service benefit may be less than 10 years (as explained above under Special Limitations on Past Employment.

Year of Contributory Service

Each calendar year in which you complete at least 500 covered hours counts as one of your years of contributory service.

How to Calculate Your Non-Contributory Service Benefit

There are three steps to figuring your non-contributory service benefit:

Step 1—Calculate the average amount of basic contributions paid for your covered employment in each of your first five years of contributory service (years when you earned at least 500 covered hours). Contributions for calendar years that begin on or after your 10th anniversary under the Plan cannot be used to calculate your non-contributory service benefit.

Step 2—Take 1.20% of your average annual contributions from Step 1. This amount determines the value of each year of non-contributory service you have earned. If your first covered hour under the Plan is before July 1, 2003, the percentage used to determine your non-contributory service benefit is 2.00% rather than 1.20%.

Step 3—Multiply the result from Step 2 by your years of non-contributory service.

The result from Step 3 is your non-contributory service benefit. Add this amount to your contributory service benefit to determine your total contribution account benefit.

Click here for an example of how a non-contributory service benefit is calculated.Page Top link

Non-Contributory Service Benefit Based on Intermediate Employment

If you leave covered employment and later rejoin the Plan after 1986 as part of a new Teamster bargaining unit, you may be eligible for a non-contributory service benefit based on your intermediate employment.

Intermediate employment is your unbroken non-covered employment with an employer before that employer first starts contributing to the Plan for your unit.

Eligibility

If you leave covered employment at any time and then rejoin the Plan after 1986 as part of a new Teamster bargaining unit, you may be eligible for a non-contributory service benefit. This benefit is based on your total years and months of intermediate employment.

To qualify for a non-contributory service benefit based on your intermediate employment, you must meet all of the following conditions:

  1. You must be a member of a Teamster bargaining unit when it becomes covered by the Plan, and
  2. Your bargaining unit must enter the Plan after 1986, and
  3. You must not have a forfeiture of service while you are away from covered employment, and
  4. Your bargaining unit must never have been covered under the Plan.

The rules on intermediate employment are similar to those for past employment as explained earlier in this section.

Up to 10 years of intermediate employment may be recognized. However, if you receive credit for years of past employment under the Plan’s five-year average benefit formula (see Five-Year Average Benefit for more information) or contribution account benefit formula (click here for more information), the 10-year maximum is reduced by those years of past employment.

The formula for calculating a non-contributory service benefit based on intermediate employment is similar to the formula used for calculating a non-contributory service benefit based on past employment.

The same special limitations that apply to past employment if you enter the Plan as part of a specific type of employee group also apply to intermediate employment. These limitations are explained under Special Limitations on Past Employment.

Your Area Administrative Office can provide more information about how this benefit is calculated and whether you qualify.

Click here for questions and answers about Contribution Account Benefit.Page Top link