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Five-Year Average Benefit
If you joined the Plan before 1987, you earned benefits under the Plan’s five-year average benefit formula for your covered employment before 1987. If your Plan coverage starts in 1987 or later, all of your benefits are earned under the contribution account benefit 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.
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. You may also earn partial future service credits as shown below.
Example: Calculating Future Service Credits
Covered Hours, Year 1: 2,080
Covered Hours, Year 2: 1,500
Covered Hours, Year 3: 1,875
Covered Hours, Year 4: 2,000
Covered Hours, Year 5: 2,080
Assume you worked the covered hours shown above for years before 1987. Your covered hours add up to 9,535. These covered hours when divided by 1,875 provide you with 5.09 future service credits. If you lost covered hours because of a break in service before 1976, click here.
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.
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:
If Your First Covered Hour:
Is Before January 1, 1974, Then:
You earn up to a maximum of 18 1/3 past service credits based on your past employment.
Is Between January 1, 1974 and December 31, 1986, Then:
You earn up to a maximum of 10 past service credits but not more than twice the number of your covered hours divided by 1,875.
Note: If your first covered hour is between January 1, 1974 and December 31, 1979, you may qualify for more than 10 past service credits. Your Area Administrative Office can provide more information. 
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 a 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 had less than five 500 covered hour years before 1992, your five-year average rate equals the total contributions made on your behalf up through 1991 divided by your total covered hours 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.
Your five-year average benefit is added to your contribution account benefit (based on your Plan coverage after 1986) to arrive at your total normal retirement benefit. Click here for an explanation of how your Contribution Account Benefit is calculated.
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