QPSA (Qualified Pre-Retirement Survivor Annuity)

 

Dear Members,

Many of you may not be aware of an option that you have as an active employee of American Airlines regarding your pension. For this reason, we are posting a link to the QSRPA election form.

As an active employee of American Airlines, many members have selected the 100% survivor annuity for their spouse, otherwise their spouse will receive 50% of the Member’s accrued pension should the Member die as an active employee.  There is no additional cost for selecting the 100% survivor annuity.  These same employees intend to reevaluate, and probably change, this election well in advance and prior to the commencement of their retirement process.

To see what option American Airlines has on file for you
(The law requires an automatic default of 50% for your spouse)

go to JETNET,
Benefits Page,
Go to Benefit Service Center,
Select My Pension,
Select Estimate Your Pension,
Select View My Specific Plan Data,
scroll down to view your options selected. 

If you have previously sent in an option form or plan to send in an option form, make sure the Company updates your selection correctly and make a copy of the JETNET page, keep this copy in a safe place with your other important documents.

This is not an endorsement or advice on your personal financial decisions. You should always contact a financial advisor before making any critical financial decisions including but not limited to pension elections.

Sincerely,

Local 563

 

 

 

From the Contract:

 

ATTACHMENT 40.1 – PRE-RETIREMENT SURVIVOR BENEFIT CHARGE

 

From:  Mark Johnson

To:       John Orlando

Re:      Pre-retirement Survivor Benefit Charge

 

Revised March 1, 2001

October 19, 1995

 

This letter follows up our conversation of today regarding the charge for the pre-retirement survivor benefit.

 

The Retirement Equity Act of 1984 mandated that pension plans provide a benefit for the surviving spouse of an employee who dies vested, but prior to retirement.  This is known as the Qualified Pre-retirement Survivor Annuity (QPSA).  Because this requirement adds to pension costs, employers are allowed to recover the cost by reducing the employee’s pension at retirement.  The AA reduction at retirement for QPSA coverage does not fully cover the cost of providing this benefit.  QPSA coverage is still heavily subsidized by American.

 

QPSA coverage is mandatory and automatic unless the employee and spouse sign a waiver.  The benefit and how the charge is calculated are explained in detail in the Summary Plan Description.  The calculation is based upon a percentage by age for the number of years coverage was in effect.  There is no charge for providing the coverage past age 65, although the employee is charged for those years under age 65.  Once an employee is at least age 55 with 15 years of credited service or age 62 with 10 years of credited service, the charge also stops accumulating.  The charge is based only on the mandatory 50% survivor benefit.  Employees who have elected a larger survivor benefit are not charged more.

 

Since the actual QPSA calculation is complex and can only be done accurately when a exit date has been established, for estimate purposes only we show a uniform $20 monthly reduction.  We use $20 because we rarely see a QPSA reduction of $20 or more, for simplicity in preparing estimates, $20 is shown on all estimates, even for employees who never had the coverage, or will not be charged this exact amount.

 

At retirement those employees who never had coverage will, of course, have no reduction.  For those who were covered, the reduction will be individually calculated based on their age and years of coverage.

 

As we discussed, normally about 300 TWU members retire each year.  However with the early out, we may be asking as many as 7,000 TWU members to take a close look at their pension plan.  Although the QPSA explanation has been in the Summary Plan Description, with this kind of scrutiny we are learning that we can improve how we communicate very important, but unfortunately often very technical pension information.

 

 

QSRPA Election Form -  Enhanced Pre-Retirement Survivor Annuity Retirement Benefit Plan Change Form for TWU Employees

 

 

 

webmaster

Local 563 (c) 2009 | Top photo by Mike Schmidt