CLARIFICATION: This article has been updated from its original version. PBF payments made to those retiring early do not increase after reaching age 65. Only those taking regular retirement or on disability are eligible for full payments. Early retirees’ PBF payments (between ages 62 and 64) are permanently reduced. See 'PBF FAQs' for more information.
Thinking about retirement can be
overwhelming. The list of things to consider often seems endless.
But the most important calculation is the same for everyone: how to squeeze every last dime out of your retirement savings, leaving nothing on the table.
That’s why International Secretary-Treasurer Kenneth W. Cooper wants to make sure that – for “A” members, at least – maintaining your IBEW international union membership finds a prominent place on your planning checklist.
“Failing to stay on the union’s rolls could mean losing out on the payments you’ve earned thorugh the Pension Benefit Fund,” Cooper said. “It’s not the biggest pension you’ll receive, but you worked hard for it, and you deserve to have it.”
The IBEW established the PBF in 1927 to provide for electricians, wiremen and linemen what was then considered a rare retirement benefit. Over the last 90 years, the fund has grown to become an important supplementary pension for the IBEW’s “A” members.
Despite its relatively small size, Pension and Reciprocity Department Director Bruce Burton says the PBF represents some of the best value for money you’re likely to find in retirement. “In about four years, you get back every dime you put into the PBF,” he said. “And that’s before you factor in the plan’s death benefit, which can help ease the burden on your family.”
But problems arise, Cooper said, when some members who reach retirement age or who take an early retirement stop paying dues before receiving a letter from his office confirming they have been approved for a PBF pension.
“Whether they mistakenly believe that they no longer need to pay dues once they reach the retirement age for their local’s pension plan,” Cooper said, “or perhaps they are simply unaware of the benefits available to them through the PBF — either way, we want to make sure they get what they’re owed.”
According to the IBEW Constitution, members who stop paying dues to the International Office must be dropped from the union’s rolls within six months. When this happens, they forfeit what they have accrued toward the PBF.
About half of the union’s membership starts as “A” members — primarily in the construction branch — but any member can upgrade their status to participate in the PBF. Having more “A” members results in a stronger pension fund for everyone.
Besides the PBF, other benefits of “A” membership include a death benefit of at least $3,000, which requires just six months of IBEW service for a member’s beneficiary to receive payment. Also, many local unions require “A” membership to run for leadership positions.
Burton pointed to the 4-year return on investment as evidence of the uniqueness of the PBF, which is one of the only union pensions around that is entirely funded by members’ dues — unlike local pensions or corporate plans where company contributions are part of the collective-bargaining process.
At $4.50 per month for each year of service, the PBF might not seem to be a lot of money. But say you started working in the trade today at age 25. If you retire 40 years from now and maintain your IBEW membership all the way through, upon retirement you will be eligible to receive a PBF benefit of $180 a month. By age 75, the same 40-year member will have received more than $21,000 from the PBF.
“That’s real money,” Burton said. “It’s easy to forget how quickly it can add up.” He noted that current retirees receive a benefit calculated at the time they retired, which may be less than current rates.
That monthly PBF payment is in addition to any other retirement funds at your disposal — your monthly Social Security check, for example, or pension payments from your local union or your employer’s pension plan. (Those taking early retirement between the ages of 62 and 64 experience a permanent reduction in monthly PBF payments. Only those retiring at age 65 or later experience no reduction.)
“In retirement, every bit of income helps,” Cooper said. “You’ve been paying into the PBF every month for your entire career. You deserve to enjoy its benefits.”
Call your local union office with any questions about early retirement or about your membership type and how to make changes to it. For questions about the PBF or to apply for benefits, contact the Pension and Reciprocity Department at email@example.com or (202) 728-6206.