Five-Year Average Benefit
This section explains the benefit you earn under the Plan’s five-year average formula for covered employment before 1987. If you joined the Plan before 1987, you should read this section. If your Plan coverage starts in 1987 or later, you can skip this section (since all of your benefits are earned under the contribution account benefit formula.
Topics Below
Five-Year Average Formula
STEP 1—Determine Your Total Past and Future Service Credits
STEP 2—Calculate Your Five-year Average Rate
STEP 3—Determine Your Benefit Factor
STEP 4—Multiply Your Benefit Factor by Your Total Service Credits
Five-Year Average Formula
Under the five-year average formula, you earn a monthly retirement benefit based on your covered hours and past employment, if any, up through 1986. This is called your five-year average benefit. Your five-year average benefit is determined in four steps:
Step 1—Determine your total past and future service credits (up to 33 1/3 total credits).
Step 2—Calculate your five-year average rate.
Step 3—Use your five-year average rate to determine your benefit factor.
Step 4—Multiply your benefit factor by your total service credits.
The result is your five-year average benefit payable at normal retirement age.
STEP 1—Determine Your Total Past and Future Service Credits
The amount of your five-year average
benefit depends on how many service
credits you earn. Your service credits
are the total of the past service credits
and future service credits you earn
through December 31, 1986 (up to a
combined maximum of 33 1/3 service
credits). You cannot earn past or
future service credits for your work
after 1986.
Note: Service credits are not the same as years of vesting service and are not used to determine whether you are vested.
Future Service Credits. To determine your future service credits, your Plan divides your total covered hours up through December 31, 1986 by 1,875. This means you earn one full future service credit for each 1,875 covered hours you completed before 1987.
Click here for an example of calculating your future service credits.
Past Service Credits. If your first covered hour under the Plan is before 1987, you may qualify for past service credits based on your past employment. (Click here for an explanation of past employment.)
Your Plan has certain limits on the number of past service credits you can earn. In general, you earn one past service credit for each year of past employment you are eligible for, up to the maximum shown below.
Click here for a table of past service credit limits. 
STEP 2—Calculate
Your Five-year Average Rate
The amount of your
five-year average benefit also depends on your benefit factor as
determined by your five-year average contribution rate. Your five-year
average rate is the average of the contribution rates paid on
your behalf in the five most recent calendar years up through
1991.
You must have earned at least 500 covered hours in a calendar year for that year to be used in determining your five-year average rate.
For seasonal employees working in the food processing industry, the covered hour requirement is 250.
Your five-year average rate is calculated as follows:
- Figure an average yearly contribution rate for each of the five most recent calendar years up through 1991 when you had at least 500 covered hours.
- Add up the five yearly rates.
- Divide the total of the five yearly rates by 5. The result is your five-year average rate.
If you do not have five years before 1992 in which you had at least 500 covered hours per year, your five-year average rate equals the total contributions made on your behalf up through 1991 divided by your total covered hours up through 1991.
Click
here for an example of how to calculate your five-year average
rate.
STEP 3—Determine
Your Benefit Factor
Once your five-year
average rate is calculated, the next step is to determine the
benefit factor for that rate. To
find your benefit factor, click here to look up your five-year
average rate.
The benefit factors shown in Table 4 apply if you are an active
Plan participant at any time since 1985. If you do not meet this
requirement or if your five-year average rate is not shown, contact
your Area
Administrative Office to find out your benefit factor.
STEP 4—Multiply
Your Benefit Factor by Your Total Service Credits
To complete the calculation
of your five-year average benefit, multiply the benefit factor
that applies to your five-year average rate by the total service
credits you earned. The result is your five-year average benefit.
Click
here for questions and answers about Five-Year Average
Benefit.
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