Introduction
Having adequate
retirement income is important to all of us, and the older we are, the more
vital our concern. All too often, we become so involved with today’s financial
responsibilities that we delay planning for tomorrow. Then tomorrow arrives
before we are prepared.
The Company’s Pension
Plan is designed to help make the years ahead as financially comfortable as
possible for you and your family. The Pension Plan can provide monthly income
to you for life after you retire from the Company. It can also pay benefits if
you retire early, as well as continue benefits to your beneficiary after your death.
Take a look at the
“At-A-Glance” chart on the next page. It highlights the features of your Pension
Plan. You’ll find more detailed information throughout the rest of this summary
plan description (SPD).
This summary plan description is effective for
active employees as of July 2000. Certain provisions described here may not
apply to participants who terminated before the effective date. Terminated
participants are covered under the provisions of the plan in effect at the time
they left the Company.
Your Pension Plan At-A-Glance
|
Feature |
Details |
|
Automatic Participation |
Once you become eligible to participate, you are automatically enrolled in the plan. |
|
No Cost to You |
The Company makes all contributions to the plan. You pay nothing. |
|
Monthly Benefits After
Retirement |
The plan provides monthly income for the rest of your life after retirement. |
|
Early Retirement at Age
55 |
If you qualify, you can retire as early as age 55. |
|
Benefits Based on
Earnings and Years of Service |
Pension benefits are calculated using your average monthly compensation and years of service with the Company. |
|
Payment Options |
At retirement, you can choose a variety of payment options, several of which, provide your beneficiary with a monthly income after you die. |
|
Vesting |
You become vested, or earn “ownership” in your benefit under the plan, when you complete five years of service. |
When Participation Begins
As a
regular full-time or part-time employee,
you automatically begin participating in the plan after completing one year of eligibility service. A year of
eligibility service means a 12-month
period in which you work at least 1,000 hours—normally measured from your date
of hire. If you don’t have 1,000 hours in your first 12 months, you will become
a participant in any subsequent calendar year, provided you work at least 1,000
hours in such calendar year.
You are considered to be
inactive if you are absent for reasons of illness, disability or leave of
absence. If you are inactive when you become eligible, you will be enrolled in
the plan when you return to work.
Vesting
You earn an irrevocable
right to, or “vest” in, your plan benefit after completing five years of
vesting service with the Company. The Gas Company uses a vesting schedule
called five year “cliff” vesting. This means you are 0% vested until you complete five years of vesting service.
In your first year of employment, you earn a year of vesting service if
you work at least 1,000 hours between your hire date and first anniversary. In
addition, you earn one year of vesting service for each calendar year in which
you complete at least 1,000 hours of service with the Company or any Sempra
Energy affiliate beginning the calendar year in which your first anniversary
occurs. For example, if your hire date is
|
Measurement Period |
Hours Worked |
Vesting Service |
|
|
1000+ |
1 year |
|
|
1000+ |
1 year |
|
|
1000+ |
1 year |
Once vested, you have
earned a non-forfeitable right to a benefit from the plan, even if you leave
the Company before retirement age.
For purposes of this
plan, partial years of vesting service will not be recognized for calendar
years in which you work less than 1,000 hours of service.
Breaks in Service
Your service with regard
to vesting and eligibility will be affected if your employment with the Company
is interrupted. You have a one-year break
in service during any calendar year in which you are credited with less
than 501 hours of service.
If you experience a
break in service, you do not get vesting or service credit for that year. You
will, however, receive credit for the period of time before and after your
break in service.
If your employment is
interrupted because of pregnancy, childbirth, adoption or family leave of
absence, you may be eligible to receive service credit for the hours not
worked. If your break in service causes you to have less than 501 hours of
service during the calendar year, you will be granted up to eight hours of
service per day of absence, up to a maximum of 501 hours for each separate
leave of absence.
Service credit will be
granted for the following types of nonwork hours:
n
Approved
personal leave of absence of less than 30 days
n
Dependent
care leave
n
Limited
union leave
n
Family
medical leave.
Service credit will be
granted before and after, but not during, the time that an employee is on:
n
Layoff
status (not to exceed two years)
n
Extended
union leave.
Such leaves would not be
considered a break in service.
Re-Employment After a Break in Service
Service Credit Toward Eligibility
If you leave the Company
for any reason before meeting the eligibility requirements described on
page 3 and are later rehired, or if you work less than 501 hours in a calendar
year, you will enter the plan automatically upon meeting the eligibility
requirements.
Service Requirements Toward Vesting
If you leave the Company
for any reason and are later rehired, or have a break in service because you
worked less than 501 hours in a calendar year, you receive vesting credit for
years of service as follows:
If you incurred a break
in service before
n
You will
receive full credit for all previous years of service if you were vested in the
plan when you had the break
n
You will
receive full credit for previous years of service if you were not vested when you had the break in
service, and the number of consecutive one-year breaks in service is less than
your years of service before leaving the Company.
If you incurred a break
in service after
n
You will
receive full credit for all previous years of service if you were vested when
you had the break
n
You will
receive full credit for previous years of service if you were not vested when you had the break in
service, and you had less than five consecutive one-year breaks in service.
How the Plan Works
Benefits
under the Pension Plan are based on your average monthly compensation, your
years of credited service with the Company, and in many cases, your Social
Security benefit. You will need to know the following definitions to understand
how your benefit is determined:
Average Monthly Compensation
Your average monthly compensation is the
average of your highest monthly salary (your base pay rate plus any merit
lump-sum or historical premium, if applicable) for any consecutive 36-month
period out of the last 60 consecutive months of employment. Merit lump-sum or
historical premiums are included in the calculation by adding 1/12
of the amount to each of the 12 months following the payment.
Beginning in 1989,
compensation for Plan purposes is limited to the IRS limit in effect each year
under Internal Revenue Code Section 401(a)(17). In 1989, this limit was
$200,000 and increased annually. However, in 1994, the limit was reduced to
$150,000 with a provision for annual adjustments due to inflation. In 2000, the
limit is $170,000.
Year of Credited Service
You receive one year of credited service for each
calendar year during which you complete 2,080 hours of service from the day you
become a participant. Once you become a participant, you will receive partial
credit for any calendar year during which you complete more than 500, but less
than 2,080 hours of service.
Hour of Service
You receive one hour of service for each hour for which:
n
You are paid
or entitled to payment for performing duties at the Company, including overtime
n
You are
eligible to receive disability benefits under the Disability Benefit Plan
n
You would
have been scheduled to work while on a strike authorized by a collective
bargaining agreement
n
You are paid
or entitled to direct or indirect payment by the Company for reasons other than
performance of duties (e.g., vacation, holiday, illness, jury duty or military
duty)
n
Back pay
that is either awarded to you or agreed to by the Company.
There are two limits on
how hours of service may be credited to you. First, you will not be credited
with more than 501 hours for any single period during which you perform no
duties for the Company, except if you are receiving Long-Term Disability
benefits. Second, payments from the Company will not be counted toward earning
hours of service if those payments were made solely to comply with Workers’
Compensation, unemployment compensation or disability insurance laws or were
intended to reimburse you for medical or medically-related expenses.
Estimated Monthly Social Security
Benefit
For pension benefit
calculation purposes, the plan administrator estimates your Social Security
benefit payable at your Social Security retirement age. This estimate is
determined by using your actual earnings for all years of employment with the
Company and by making certain assumptions about your earnings history prior to
joining the Company.
You can request that
your pension benefit be calculated using your actual earnings history. You must supply the
Submitting your actual
earnings history does not necessarily
mean that your pension benefit will increase—it could increase, remain the same
or it may decrease. Your actual earnings history may not affect your benefit at
all if the non-offset formula produces a greater benefit for you than the
offset formula (see “Calculating the Amount of Your Plan Benefit” beginning on
page 9).
Your Social Security retirement age depends on the year in which you were
born as shown in the following chart.
|
Year of Birth |
Social Security Retirement Age |
|
1937 or earlier |
65 |
|
1938 to 1942 |
65 plus two months for
every year after 1937 (for example, if you |
|
1943 to 1954 |
66 |
|
1955 to 1959 |
66 plus two months for every year after 1954. |
|
1960 or later |
67 |
When You Can Retire
You can elect to retire
on one of the following dates:
n
Your Normal Retirement Date is the first day
of the month after the later of your 65th birthday or the fifth anniversary of
your hire date
n
Your Early Retirement Date is the first day
of any month after your 55th birthday but before your Normal Retirement Date,
provided you have completed at least 15 years of vesting service
n
Your Postponed Retirement Date is the first
day of any month after your Normal Retirement Date on which you choose to
retire.
Calculating the Amount of Your Plan Benefit
Normal Retirement Benefit
The plan uses two
methods for calculating your accrued monthly benefit. You will receive the
higher of the two amounts. The non-offset formula uses a percentage of your
average monthly compensation. The offset formula uses a higher percentage, then
subtracts 50% of your estimated Social Security benefits at your Social
Security normal retirement age.
Non-Offset Formula
Your monthly pension
benefit at age 65 will be equal to a certain percentage of your average monthly
compensation. This percentage is based on your years of credited service when
you retire. If you have completed 35 years of credited service when you retire,
your monthly pension benefit will be 46% of your average monthly compensation.
If you have more than 35 years of credited service when you retire, this
percentage will increase 0.5% for each year of service over 35 years.
The following table shows the benefit percentage according to years of
credited service:
|
Non-Offset Formula |
|||
|
Years of Credited |
% of Average Monthly Compensation |
Years of Credited |
% of Average Monthly Compensation |
|
5 |
7.50 |
21 |
30.10 |
|
6 |
9.00 |
22 |
31.45 |
|
7 |
10.50 |
23 |
32.80 |
|
8 |
12.00 |
24 |
34.15 |
|
9 |
13.50 |
25 |
35.50 |
|
10 |
15.00 |
26 |
36.85 |
|
11 |
16.50 |
27 |
38.20 |
|
12 |
18.00 |
28 |
39.55 |
|
13 |
19.50 |
29 |
40.90 |
|
14 |
21.00 |
30 |
42.25 |
|
15 |
22.50 |
31 |
43.00 |
|
16 |
23.75 |
32 |
43.75 |
|
17 |
25.00 |
33 |
44.50 |
|
18 |
26.25 |
34 |
45.25 |
|
19 |
27.50 |
35 |
46.00 |
|
20 |
28.75 |
|
|
|
PLUS |
|||
Offset Formula
Your monthly pension
benefit at age 65 will be equal to a certain percentage of your average monthly
compensation, less 50% of the Social Security benefit for which you are
eligible on your Social Security normal retirement date. This percentage is
based on your years of credited service when you retire. If you have completed
35 years of credited service when you retire, this percentage will be 59.75% of
your average monthly compensation. If you have more than 35 years of credited
service when you retire, this percentage will increase 0.5% for each year of
service over 35 years.
The following table shows the benefit percentage according to years of
credited service:
|
Offset Formula |
|||
|
Years of Credited |
% of Average Monthly Compensation |
Years of Credited |
% of Average Monthly Compensation |
|
5 |
13.75 |
21 |
43.85 |
|
6 |
16.50 |
22 |
45.20 |
|
7 |
19.25 |
23 |
46.55 |
|
8 |
22.00 |
24 |
47.90 |
|
9 |
24.75 |
25 |
49.25 |
|
10 |
27.50 |
26 |
50.60 |