SAMPLE ANNUITY CALCULATION

From: Subject: SAMPLE ANNUITY CALCULATION Date: Tue, 1 Jun 2010 16:06:50 -0500 MIME-Version: 1.0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.chipabf.org/About%20Your%20Benefits/Examples/exampall.htm X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.5931 SAMPLE ANNUITY CALCULATION

Example-A.

A SAMPLE ANNUITY CALCULATION

The following example is provided for you to develop = a better=20 understanding of how your monthly annuity will be calculated at = retirement.=20 References made to the worksheet following this text will be shown in = brackets (=20 ).

Under section 5/5-132 of the pension code, "any = policeman who=20 withdraws from service after December 31, 2003, with at least 20 years = of=20 service credit regardless of age, shall be entitled to an annuity to = begin not=20 earlier than attainment of age 50, if under that age at withdrawal, = equal to=20 2.5% of the average monthly salary for the four highest consecutive = years of the=20 last ten years of service for each completed year of service or = fraction=20 thereof". The maximum of 75% (Service) is obtained when an officer = reaches 29=20 years and one day of creditable service. In this example this police = officer was=20 married when he retired. This officer retired September 1, 2004. At = resignation=20 for retirement the police officer has a net service credit of 35 years, = 11=20 months and 1 day. With his age being 59 years 3 months and 12 days, the = formula=20 annuity provisions of 20 years of service at age 50 have been met. The = resulting=20 formula percentage of the police officer's four-year average salary is a = maximum=20 of 75%. (Formula Percentage =3D75%). As an example, with 25 years and 1 = day of=20 service an officer would receive 65% of the four year average salary. = Please=20 be aware that all lost time due to docked days, suspensions or any other = reason=20 for lost days of pay over your career, factor into the net service = credit you=20 have at your date of retirement.

Using the four highest consecutive annual salaries = this police=20 officer earned each year out of the last ten years, the fund determines = what the=20 average monthly salary was for this four-year period. Usually, the = salaries you=20 have recently earned, going back forty-eight months from your retirement = date,=20 are used to determine your average monthly salary. (Average Monthly = Salary=20 $6,104.04). Duty availability pay is, of course, added to the salary we = will=20 use. Applying the service percentage earned of 75% to the four-year = average=20 salary of $6,104.04 earns this police officer a monthly annuity of = $4,578.03.=20

This Officer, being born before January 1, 1950, will = receive a=20 3% automatic increase to his monthly base annuity 1 year after his = anniversary=20 date of retirement or his attainment of age 55 (whichever comes later). = After=20 you receive your first increase in your monthly base annuity you will = receive,=20 each January 1^st thereafter, another fixed 3% increase on the = base=20 amount of your annuity.

With a resignation date the close of business on the=20 15^th of any month, you will receive your first annuity = payment dated=20 the last day of the next month. In this example, using a resignation = date of=20 July 15, 2004 close of business, this police officer will receive his or = her=20 first pension payment on August 31, 2004, covering the period July 16, = 2004=20 through August 31, 2004. The Fund does offer and strongly urges you to = sign up=20 for our electronic fund transfer program that will automatically credit = your=20 bank account with your payment on the date of the payment. This = eliminates any=20 chance of lost mail and gets you your annuity payment on the day it is = payable=20 to you.


Average Salary
Year	Number	Salary	Total	Service	Ee Age

2004	2	6,067.50	12,135.00	2004-09-01	2004-09-01
2004	1	6,697.50	6,697.50	1968-09-30	1945-05-19
2004	2	6,067.50	12,135.00	--------------------------------
2004	1	6,697.50	6,697.50	=20 35-11-01	=20 59-03-12
2004	2	6,067.50	12,135.00	0-00-00
2003	1	6,697.50	6,697.50	---------------
2003	2	6,067.50	12,135.00	=20 35-11-01
2003	1	6,697.50	6,697.50
2003	2	6,067.50	12,135.00
2003	1	6,697.50	6,697.50	Formula Percentage =3D 75%
2003	2	6,067.50	12,135.00	Formula Benefit =3D 0.75 X 6,104.04 =3D = 4,578.03
2003	1	6,697.50	6,697.50
2003	2	6,067.50	12,135.00	Money Purchase Benefit =3D 2,246.44
2002	1	6,553.50	6,553.50	Formula Benefit =3D 4,578.03
2002	2	5,948.50	11,897.00
2002	1	6,553.50	6,553.50	Amount of Annuity
2002	2	5,948.50	11,897.00	Per Month =3D 4,578.03
2002	1	6,553.50	6,553.50
2002	2	5,948.50	11,897.00
2002	1	6,553.50	6,553.50
2002	2	5,948.50	11,897.00
2001	1	6,299.50	6,299.50
2001	2	5,719.50	11,439.00
2001	1	6,299.50	6,299.50
2001	2	5,719.50	11,439.00
2001	1	6,299.50	6,299.50
2001	2	5,719.50	11,439.00
2001	1	6,299.50	6,299.50
2001	2	5,719.50	11,439.00
2000	1	6,054.50	6,054.50
2000	2	5,499.50	10,999.00
2000	1	6,054.50	6,054.50

Total Salary for 4 Years =3D	292,944.00

Average Monthly Salary =3D	6,104.04

     Example-B.
          =             &= nbsp;           &n= bsp;           &nb= sp;           &nbs= p; =20 Widow=92s Annuities
          =             &= nbsp;           &n= bsp;           &nb= sp;      =20 Death in Service (non-duty)

Generally, a money purchased benefit is provided, = based on=20 total salary deductions and City contributions. If a policeman dies in = service=20 after December 31, 1985, with at least 1.5 years of service, the = widow=92s=20 annuity is the greater of: 30% of the annual maximum salary attached to = the=20 classified career service position of a first class patrolman at the = time of his=20 death (without dollar limit) or 50% of the benefit accrued by the = policeman at=20 the date of death. (Sec. 5/5-136.1)

This benefit is payable to the widow until her death. = In the=20 event the widow remarries before age 60 such benefit payment will be = suspended=20 during the period of such marriage and may be resumed in the event of a=20 termination of such marriage.

Example-C.

= &= nbsp; &n= bsp; &nb= sp; &nbs= p; =20 Widow=92s Annuities
&nb= sp; &nbs= p; = ; = =20 Death in Service (duty related)

A compensation annuity is based on 75% of the = member=92s salary=20 attached to the career service position that would have ordinarily have = been=20 paid to such member as though in active discharge of his duties at the = time of=20 death payable until the member would have attained age 63. A = supplemental=20 annuity then takes effect and is payable for life thereafter and is = equal to the=20 money purchase annuity or minimum formula benefit the spouse would have = received=20 if the member had continued in service until the member attained age 63. = (Sec.=20 5/5-144).

Example-D.
&nb= sp; &nbs= p; = ; = &= nbsp; =20 Widow=92s Annuities

&nb= sp; &nbs= p; = ; = =20 Death After Retirement

A widow of a police officer who dies on or after = January 1,=20 1991, while receiving a retirement annuity without regard to the date of = retirement, would be entitled to an annuity equal to 50% of the = retirement=20 annuity at the time of death. The retirement annuity at time of death = may of=20 course include any automatic increase the retiree had received prior to = his or=20 her death. Presently, there is no automatic increase payable on a spouse = annuity=20 going forward. (Sec. 5/5- 1 36. 1)

Example-E.

= &= nbsp; &n= bsp; &nb= sp; &nbs= p; =20 Widow=92s Annuities
&nb= sp; &nbs= p; = ; =20 Maximum And Minimum Widow Annuities

Currently the minimum monthly annuity of any spouse = is=20 $1000.00. This entitlement is subject to certain defined requirements = enumerated=20 in Sec. 5/5-167.4. As for a maximum, there is no dollar limit on the = 30%, 40% or=20 50% categories, (Sec. 5/5-136.1)

Example-F.

= &= nbsp; &n= bsp; &nb= sp; &nbs= p; =20 Children=92s Annuities

Eligibility is met if children have been born or = legally=20 adopted with proceedings initiated at least 6 months before the date of = the=20 policemen=92s withdrawal or death (waived for Duty death), payable at = death to all=20 unmarried children less than 18 years of age. The benefit is 10% of the = annual=20 maximum salary of a first class patrolman during widow=92s (widower=92s) = life, 15%=20 other- wise and is payable to age 18. If a child is disabled the = benefit=20 is continued for life or until the child is no longer disabled.

There is a maximum amount allowed per family. This = condition is=20 met at 60% (non-duty death) or 100% (duty death) of the salary that = would=20 ordinarily have been paid to the policeman if he had been in active = discharge of=20 his duties. (Sec. 5/5-152).

= =20 NOTE: = Beginning=20 January 1, 1986, children not conceived in lawful wedlock shall be = entitled to=20 the same benefits as other children. A child=92s or survivor=92s benefit = shall not=20 be denied because of the illegitimacy of the child; however, in cases = where the=20 father is the employee- parent, paternity must first be established. = Paternity=20 can be established by any of the following means; (1) acknowledgement by = the=20 father or (2) adjudication before or after the death of the father or = (3) by=20 other means acceptable to the Board of Trustees of the Pension Fund. (40 = ILCS=20 1/1 104.2).

Example-G.

= &= nbsp; &n= bsp; &nb= sp; &nbs= p; =20 Death Benefits

An ordinary death benefit is payable to the = designated=20 beneficiary or beneficiaries of deceased police officers. For an active = officer,=20 if death occurs before age 50, the amount of benefit payable is $12,000. = Thereafter for each year the officer remains in active service, this = benefit is=20 reduced by $400 for each year. In no event shall this benefit be reduced = below=20 $6,000. However, if death results from injury in the performance of an = act or=20 acts of duty prior to retirement on annuity, the amount of benefit = payable is=20 $12,000, notwithstanding the age attained. If the officer=92s death = occurs while=20 in receipt of an annuity, the benefit is $6,000.00. No death benefit is = payable=20 on behalf of a policeman on an authorized and approved leave of absence = in the=20 event such death occurs after sixty (60) days has elapsed from the = commencement=20 of such leave. (Sec. 5-153)