In 1997 Joe Smith switches to Management and participates in the Cash Balance Account:Īfter 5 years of service Joe will be fully vested with no term age penalties.
Joe's benefit (pension band) may change yearly. Joe will receive a monthly dollar amount into his account for each year of service. A pension band determines your benefits based on your job title/grade level/occupation. In 1990, Joe is hired by AT&T and participates in the Craft Pension Plan:Ĭraft has a defined benefit plan that uses pension bands. Let's take a look at a timeline example for Joe Smith: We will outline how the Craft & Management pension plans work because the majority of employees fall under these plans. There are many different plans available from AT&T. "You are eligible for a vested pension benefit after five years of service," If you choose to take your pension before age 65 there will be significant penalties. If you have less than 30 years of service as an AT&T management employee, even if you qualify for Mod-75, you will be penalized for taking your pension before you are 55 years old.ĪT&T employees who meet the Mod-75 requirements may also qualify for subsidized benefits, like life insurance, vision dental & retiree medical however, some of these benefits were cut or reduced in recent years.Įmployees who are pension eligible but do not currently meet the Mod-75 requirements will receive their pension benefits at age 65. For example a person with 26 years of service who is 49 years old will not qualify because they only meet the years of service requirement, but not the age requirement. It is important to keep in mind that if you only meet one of the above thresholds you will not qualify for the modified rule of 75. All of the following would meet these requirements: 25 YOS + 50 Age, 20 YOS + 55 Age, 10 YOS + 65 Age, OR 30 YOS + Any Age.
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