Transcript REED ELSEVIER INC.

The Reed Elsevier
Pension Income Plan
(PIP) and Salary
Investment Plan (SIP)
Today’s Purpose
 Discuss the changes for PIP for 2002
 Explain how PIP works
 Review when you can receive benefits
 Tell you about other information resources to
help you plan for your future
Building Your Future...
PIP
+
SIP
=
+
Social
Security
Total Retirement
Security
+
Other
Sources
In today’s dollars, about how much can a
worker age 45 now making $50,000 per year
expect to receive from Social Security at
Social Security Retirement age?
A)
$3,000
B)
$2,500
C)
$2,000
D)
$1,500
PIP Highlights
 Your benefit grows as an account balance
 Your account earns annual interest credits
 The company adds pay credits each year based on your total
pay each year
 Your account balance can continue to grow with interest credits
after you leave until you take your benefits
 Benefits will become fully vested after 5 years
 100% Company paid
What’s New
 Three months service for eligibility
 Vested benefit is payable as an annuity in
monthly installments at retirement or as a lump
sum
 SIP rollover accepted at retirement
 2% automatic increase becoming an optional
form
PIP: How It Works
Opening
Account
Balance
+
Interest
Credit
+
Pay
Credit
Opening Account Balance
Opening Account
Balance
Opening
Account
Balance
+
Interest
Credit
+
Pay
Credit
Interest Credit
 Added to your account at the end of each year
 2001 rate is 6.23%; the rate for 2002 is 5.19%
 Based on the average of 5-year and 10-year
Treasury notes, but not less than 5%
 Interest credits continue until you take your
benefits
Opening
Account
Balance
+
Interest
Credit
+
Pay
Credit
Interest Credit: Example
Opening Account Balance on January 1, 2002
Interest Credit Rate for 2002
x 5.19%
Interest Credit on December 31, 2002
Opening
Account
Balance
$10,00
0
+
Interest
Credit
$519
$10,000
$519
+
Pay
Credit
Pay Credit
Opening
Account
Balance
+
Interest
Credit
+
Pay
Credit
Basic Pay Credit
 Add age and service to get total number of
“points”
 Divide points by 10
 Apply percentage to annual pay
+
Age
Opening
Account
Balance
+
Interest
Credit
Service
+
Pay
Credit
=
Points
÷
10
=
Pay
Credit %
Pay Credit: Example
Age
Years of Cash Balance Service
Total Points
40
+ 10
50
÷10
5.0%
Pay Credit
Annual Pay
Annual Pay Credit
Added to your account on December 31
Opening
Account
Balance
$10,000
+
Interest
Credit
$519
+
$50,000
x 5.0%
$2,500
Pay
Credit
$2,500
Adding It Together: Example
Age: 40
Service: 10 years
Salary: $50,000
Pay Credit: 5.0%
Account balance on January 1, 2002
$10,000
Interest credit (5.19%) on December 31
+ $ 519
Pay credit on December 31
Account balance on December 31, 2002
Opening
Account
Balance
$10,000
+
Interest
Credit
$519
+
Pay
Credit
$2,500
+ $2,500
$13,019
Watch How Your PIP
Account Grows
Age: 41
Service: 11 years
Salary: $52,000
Pay Credit: 5.2%
Account balance on January 1, 2003
Interest credit (5.19%) on December 31
Pay credit on December 31, 2003
Account balance on December 31, 2003
Opening
Account
Balance
$13,019
+
Interest
Credit
$676
+
Pay
Credit
$2,704
$13,019
+ $676
+ $2,704
$16,399
Special Circumstances
Midcareer
Adjustment
+
Additional Pay
Credit
Special Circumstances:
Mid-career Adjustment
 Eligible if began accruing benefits after age 35
 Treated as though hired at 35
 Results in added points toward pay credit
Example:
Age joined Plan, 10 years ago
Mid-career Adjustment
Age Now
Service Now
Total Points
Divided by 10
Pay Credit
Midcareer
Adjustment
41
- 35
6
+ 51
+ 10
67
÷ 10
6.7%
Special Circumstances:
Additional Pay Credit
For Pay Over Social Security Wage Base
Additional Pay
Credit (max: 6%)
Basic
Pay
Credit
Social Security
Wage Base
($84,900 in 2002)
Your Pay
Midcareer
Adjustment
+
Additional
Pay
Credit
When You Can Receive Benefits
Eligible to receive benefits:
Normal Retirement
 At age 65 with 5 years of vesting service
Early Retirement
 As early as age 55 with 10 years of vesting service, 5
years participation in PIP
Vested Benefit at age 55 with 5 years of service
Pension paid as a monthly annuity or a lump sum
Benefit Example
 Assume 40 year old employee with 10 years of
service with an opening account balance of
$10,000. She will work to age 65 and retire.
 Total pay in 2002 is $50,000. She will receive
4% annual increases. Salary does not exceed
social security wage base.
 Assumed Interest Credit of 5% (PIP).
 Annual benefit at age 65 under PIP is $28,000.
Estimated Cash Balance Account
Account Balance Projections
400,000
350,000
300,000
250,000
Interest Credit
200,000
Pay Credit
150,000
Opening Account Balance
100,000
50,000
0
0
5
10
15
Years from 1/1/2002
20
25
What proportion of my income might I need in
retirement?
A) 50%
B) 75%
C) 100%
D) Depends on the size of my boat!
Planning for Retirement
Consider all of the ways you can plan to build
your future
 PIP
 SIP
 Social Security
 Other sources of income
PIP
+
SIP
+
Social
Security
+
Other
Sources
=
Total
Retirement
Income
Additional Resources for
Information
 Call the Reed Elsevier Retirement Center at
1-800-575-8469 between 8am and 6pm (ET),
Monday through Friday
 PIP highlights brochure
 Retirement Plan Website
 Annual pension statement
 Summary Plan Description
PIP Website
https://dbconnect.towers.com/reed
This program provides some of the features of the
Reed Elsevier US Retirement Plan (PIP). For more
detailed information about the plan, you should
read the Summary Plan Description of the PIP,
which is available by calling 1-800-575-8469.
Neither this presentation about PIP nor the
Summary Plan Description, however, takes the
place of the applicable plan documents. Should
any questions ever arise about eligibility or the
nature and extent of your benefits from the PIP,
the formal language of the plan documents as
construed and interpreted by Reed Elsevier Inc.
will govern. Reed Elsevier Inc. reserves the right
to modify or terminate this plan at any time.
Questions, Anyone?