EMPLOYEES'
RETIREMENT INCOME PLAN
PITNEY-BOWES, INC.
May 1, 1948
INSTITUTE OF
I"DUSTRIAL REATIONS MAR I I 2
One of a series of booklets describing THE PITNEY -BOWES EMPLOYEE SECURITY PROGRAM
consistng of
* REREMENT INCOME PLAN
* GROUP LIFE INSURANCE
* GROUP HOSPITALIZATION INSURANCE
Published by
*31 PITNEY
-BOWES, INC.
STAMFORD, CONN.
October 28, 1949
Printed in U.S.A. EP-10-49-6M
PITNEY-BOWES, INC.
El Stamford, Connecticut
TO OUR EMPLOYEES:
This booklet is your guide to our Retirement Income Plan, effective May 1, 1948, which replaced our former Retirement Annuity Plan.
It differs from that plan in two important ways:
First: it becomes a definite plank in our profit-sharing program, with the entire cost born by the Company, unlike the former Plan to which both the employee and Company contributed.
Second: it covers all Pitney-Bowes employees and assures all who retire a larger annual income.
You will find the Plan's full details, including approximate esti- mates of payments in different earnings and age groups, on the pages that follow. This Plan, as you would expect, was devised after the most careful study. We believe it compares with the best retirement pro- grams in the nation.
Although this booklet must be somewhat detailed, we have tried to make it clear to all. If, however, there are any parts of it that seem puzzling, please don't hesitate to see or write the Personnel Department for an explanation.
Sincerely yours,
W. H. Wheeler, Jr.
President
October 1, 1949
THE PITNEY-BOWES
EMPLOYEES' RETIREMENT INCOME PLAN
I NTRODUCTION
This booklet explains the Pitney-Bowes Employees' Retirement Income Plan. The Plan extends and increases the benefits of the former Retirement Annuity Plan, under which many employees con- tributed up to May 1, 1948, when the present Plan became effective.
The new Plan does not require contributions by employees.
Briefly, the Plan provides all regular employees with a retire- ment income at age 65. Age 65 is also the age when the regular Social Security benefits start. The retirement income under the Plan, when added to your Federal Social Security benefits, is designed to give you a total retirement income equal to approximately 1V2 per cent of your average annual compensation during the 10 consecutive years of your highest earnings, multiplied by the number of years of your service with the Company. Federal Social Security benefits depend upon the number of years you and the Company and your other employers have contributed to the Federal Social Security Plan, start- ing not earlier than January 1, 1937.
The following pages of this booklet describe the provisions of the Plan in greater detail.
P A R T I C I P A T I O N
The Plan includes all regular employees of the Company less than age 65 on date of employment.
Employees who did not contribute to the former Retirement
Annuity Plan are nevertheless included under this Plan from May 1,
1948 with full credit for all previous service. However, employees
who did contribute before May 1, 1948 had the option of getting
their money back or receiving additional annuities based on their
contributions to the former Plan.
COMPENSATION AND CREDITABLE SERVICE
The amount of an employee's retirement income from the Plan will depend upon his average final compensation and years of credit- able service completed before retirement.
Average final compensation means the average annual total salary or wages, including bonuses, overtime and any other special pay, during the 10 complete consecutive calendar years of service during which such compensation was the highest. If employed for less than 10 years at retirement date, it will be the average of such annual salary or wages during all the complete calendar years of service.
Service dates from the time of original employment, except when broken without leave of absence.
NORMAL RETIREMENT
The normal retirement date is the first day of the month nearest to an employee's 65th birthday. In the interest of maintaining a high degree of employee efficiency and opening avenues of advancement to younger employees, an employee may be continued in service beyond his normal retirement date only if it is clearly in the interest of the Company to do so. Service rendered during such a continuation will not increase an employee's retirement income under the Plan. No employee may be required to continue in service beyond the normal retirement age of sixty-five if he desires to retire.
The formula for the normal retirement income from the Plan payable each year is:
(a) 1% of average final compensation up to $3,000; plus (b) 1 ½y% of the part, if any, of average final compensation over
$3,000 but not over $10,000; plus
(c) 1 % of the part, if any, of average final compensation over
$10,000;
(d) all multiplied by the number of years of service, not exceeding 30, up to an employee's normal retirement date; plus
3
(e) if the employee has service in excess of 30 years, amounts equal to one-half the amounts under (a), (b) and (c), multiplied by the years of service over 30.
If you were a participant in the former Retirement Annuity Plan on May 1, 1948, the benefits due you thereunder on account of Com- pany contributions to that Plan will be offset against the above benefits, but any of your own contributions left under the former Plan will be used to provide an additional benefit for you at retirement.
The formula is used to calculate your retirement income from the Plan exactly, when you reach age 65 and retire. However, you may estimate your future retirement income from all sources by using the work sheet on Page 11 of this booklet.
EARLY RETIREMENT AND OTHER BENEFITS
Under the Plan, every employee who reaches 50 years of age, and who has ten or more years of service with the Company, has definite rights and benefits.
If you should leave the Company for any reason whatsoever after you become 50, and if you had ten or more years' service here, you would be entitled to receive, beginning at age 65, a retirement income based on the credits built up for you during the time you worked here.
If the Company retired you involuntarily on your part, or laid you off through no fault of your own, before you were age 65 but after you were 50 and had ten years or more service, you could have your retirement income begin at once, instead of at the age of 65. In that case, of course, the payments would be smaller because of the longer time over which they would be payable.
Even should you leave the Company of your own volition after reaching 50 and having ten years or more of service, you may receive an income beginning at an age earlier than 65 (reduced to take ac- count of such earlier age), should you become permanently disabled.
For an example of a reduced retirement income to start before
age 65, take the case of an employee who retires at age 60 and whose
annual income calculated like a normal retirement income would be
$1,000 commencing at age 65. The early retirement income com- mencing at age 60 would be reduced to approximately $650 to take account of the earlier retirement age and, therefore, the longer life expectancy over which the amount would normally be paid.
OPTIONAL FORMS OF RETIREMENT INCOME
The regular form of retirement allowance provides an income to the retired member only. If you have a dependent not adequately provided for by insurance or other means (your Company Group Life Insurance, as you know, is reduced to $500 on the normal retire- ment age of 65) you may wish to elect to have the funds available for your regular retirement income applied under one of the following options, but you must make your election before retirement income commences.
Option 1. A retirement income payable during your life in a re- duced amount, with the provision that it will be continued after your death, for the life of the beneficiary designated by you at retirement, if such beneficiary survives you.
Option 2. A retirement income payable during your life in a re- duced amount, with the provision that it will be continued after your death, at one-half of the rate paid to you, for the life of the beneficiary designated by you at retirement, if such beneficiary survives you.
For example, take the case of an employee whose regular retirement income is $1,000 a year at age 65 and who elects Option 1. The exact amount of the income will depend on the age of the designated bene- ficiary. Suppose the employee designates his wife and she is also age 65.
Then, the retired employee would receive approximately $700 a year, and after his death $700 a year would be paid to his wife if she sur- vived him.
Suppose the same employee takes Option 2 instead of Option 1. The
retired employee would receive approximately $820 a year, and after
his death his wife would receive $410 a year if she survived him.
An employee electing an option does not have to pass a physical examination. However, except in case of retirement at age 65, for the election to be effective he must live at least 30 days after applying for retirement.
PAYMENTS BY THE COMPANY
The Company makes all payments for benefits under the Plan, and no contributions are required from employees. Company payments take the form of profit-sharing declarations into the Plan's trust fund made quarterly by the Board of Directors at the same meetings at which dividends to stockholders and employees are considered.
While it is the Company's firm intention to make its payments quarterly in sufficient amounts to fully maintain the Plan's schedule of retirement income payments to employees, it is of course necessary for the Company to reserve the right to end the Plan or to reduce or suspend payments if it should be necessary to the security of the Company to do so. However, all Company payments, as soon as they are made, are held in trust to be used exclusively for the benefit of employees and retired employees, according to the provisions of this Plan.
ADMINISTRATION OF PLAN
The Plan is administered by the Administrative Committee, which consists of six members who are appointed by the Board of Directors of the Company. The Committee arranges for all retirements and generally supervises the operation of the Plan. An employee member of the Industrial Relations Council advises and works with the Com- mittee.
INVESTMENT OF FUNDS
All moneys are set aside in trust and can be used only for the benefit
of employees and retired employees or their beneficiaries under the
Plan. The Chase National Bank of the City of New York is the desig-
nated Trustee to which all contributions are paid for safekeeping and
investment.
QUESTIONS AND ANSWERS
The main provisions of the Retirement Plan have been outlined in the preceding text. The following questions and answers, however, may be helpful in answering specific questions which may occur to you.
P A R T I C I P A T I O N
1. Who is included in the Retirement Plan?
All regular employees, except those over age 65 when employed.
Anyone employed on or after May 1, 1948 will automatically be- come a member as soon as he is employed.
Anyone employed before May 1, 1948 was included on that date, whether or not he had contributed under the former Retirement Annuity Plan.
2. Does an employee have to pass a medical examination to join the Plan?
No.
3. Do all employees participate?
Yes. In order that all employees be treated uniformly and share in the benefits, the Plan provides that every employee shall parici- pate unless he is age 65 or over when first employed. As the Company makes all payments, the Plan involves no cost to any employee.
BENEFITS
4. When can an employee retire?
Any employee can retire any time after he has attained age 50 and has completed ten years of service. However, his retirement
7
income will not commence until he reaches sixty-five unless the Company has agreed to his earlier retirement.
5. Must an employee retire at age 65?
The normal retirement will be age 65. In the interest of main- taining a high degree of employee efficiency and opening avenues of advancement to younger employees, extensions in service be- yond normal retirement date may be permitted only if it is dearly in the interest of the Company to do so. The amount of your re- tirement income when finally payable will not be increased on account of any period of work beyond your normal retirement date. No employee may be required to continue in service be- yond age 65 if he desires to retire.
6. Suppose, at the request of the Company, an employee agrees to re- main in service beyond age 65. May he retire whenever he pleases thereafter?
Yes. He may apply for retirement to take place on the first day of the calendar month next following the date of filing his appli- cation.
7. How are retirement incomes paid?
By checks mailed to the retired employee monthly as long as he is alive, and ending with the last check received before death.
8. What if I leave the Company before reaching normal retirement age of 65?
Under the Plan, every employee who reaches 50 years of age, and who has ten or more years of service with the Company, would have definite rights and benefits. Details of this are covered under the heading "Early Retirement and other Benefits" on Pages 4 and 5 of this booket.
9. If an employee dies after he has retired, is there any further pay-
ment of benefits?
No; unless an optional form of retirement income has been elected as described below.
10. What is meant by optional benefits?
At any time before his retirement income payments begin, an employee may elect to take a smaller retirement income for him- self, in order that his wife or other beneficiary may receive an in- come after his death. These benefits, providing for payments to a beneficiary after your death, are known as "optional benefits".
11. If an employee elects an optional benefit, will his own retirement income be the same?
No; it will be less, because of the cost of providing the supple- mental benefits to the beneficiary named under the option.
12. May an employee revoke or change an optional election?
Yes, but not later than 30 days before the date his retirement income payment is to become effective.
MISCELLANEOUS
13. What contributions are made by employees?
None. The Company makes all the payments to provide the benefits and pays all the administrative expenses of the Plan.
14. Who manages the Retirement Plan?
The Retirement Plan is supervised by an Administrative Com- mittee of six members who are appointed by the Board of Di- rectors of the Company. An employee member of the Industrial Relations Council advises and works with the Committee.
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15. Are all employees, including officers, treated on the same basis under the Plan?
Yes, except that the benefits are reduced on that part of com- pensation in excess of $10,000 per year.
16. What assurance does an employee have that the Plan will con- tinue to operate successfully?
All moneys are set aside in trust and can be used only for the benefit of employees and retired employees or their beneficiaries under the Plan. The Chase National Bank of the City of New York is the designated Trustee to which all payments are made for safekeeping and investment. The payments of the Com- pany are set on the basis of actuarial computations, to provide the full benefits under the Plan and create reserve funds to assure the payment of all benefits. The Company hopes and expects to con- tinue the Plan indefinitely, but it reserves the right to change or discontinue the Plan if unforseen circumstances arise.
NOTE: This brief booklet is not intended to be a substitute for the
formal document that is the Plan and controls its operation. The
formal document, however, is available at the office of the Company's
Secretary to any employee who wishes to read it. Its provisions will
be controlling, of course, in case of any conflict with this booklet.
How to Estimate Your Benefits at Age 65
IMAGINARY
INCOME FOR FIRST 30 YEARS' SERVICE EXAMPLE YOURSELF 1. Expected average annual total pay during
the 10 consecutive years before age 65 that it
was the highest.
...3400
...2.1%
(.01) of line (1) up to $3,000 ... 30
...3. 1½% (.015) of line (1) between $3,000
and $10,000
....$ 6
...4. 1% (.01) of line (1) over $10,000
- ...Add lines (2), (3) and 5. (4) . ...$
...6. Number of years of service, not over 30, to
age 65 ...30
...7. Multiply line (5) by line (6) to obtain in- come for first 30 years of service under
Company Plan ...$... 1,080
...ADDITIONAL INCOME IF YOU HAVE OVER 30 YEARS OF SERVICE
8. Take one half the amount under line (5) $ 18
...9. Years of service over 30 to age 65 ... 3
...10. Multiply line (8) by line (9) to obtain
allowance for service over 30 years . ...$
...SOCIAL SECURITY BENEFIT
11. Expected average earnings per year, not over
$3,000, while covered under Social Security
from January 1, 1937 to age 65 ...$... 2,900
...12. Add $180 to 1/10 of line (11)
.470
...13. Number of years while covered under Social
Security from January 1, 1937 to age 65 28
...14. Multiply 1% (.01) of line (12) by line
(13)
.131.60
...15. Add line (12) and line (14)
.601.60
...YOUR TOTAL RETIREMENT INCOME 16. Company income for service up to 30 years
from line (7)
...$1,080
...17. Company income for service in excess of 30
years from line (10) .$... ..5
...18. Social Security benefit from line (15)
.601.60
...Total retirement income to you . $1,73... .60
...Additional Social Security Benefit if wife
living and age 65 or over (½2 of line 18).... $ 300.80
...COMBINED INCOME $2,036.40
...11
Table for Estimating Your
ANNUAL PITNEY-BOWES RETIREMENT INCOME
YEARS OF SERVICE AT AGE 65
15 YES. 20 YRS.
$
270
300
375
450
562
675
900
1,125
1,575
2,025
$
360
400
500
600
750
900
1,200
1,500
2,100
2,700
25 YRS. 30 YRS. 35 YRS.
$
450
500
625
750
938
1,125
1,500
1,875
2,625
3,375
$