feature
Agent Pension Plan Information for
Former Allstate Employee Agents
By Nancy Fish
F
or the most part, Allstate stopped
hiring employee agents in 1990.
Then in the year 2000, the company
terminated all its remaining employee
agent contracts, except for those located
in certain jurisdictions, such as the state
of New Jersey.
At the time, the company had 6,171
employee agents who were affected by
the “Preparing for the Future” initiative,
wherein agents were allowed to continue
their careers only if they agreed to become independent contractors and suffer the loss of their employee benefits.
Most of those affected were over the age
of forty.
Of the 6,171 affected agents, 3,772
converted to the EA agreement and continued their agency relationship; 2,399
selected another option, and parted ways
32 — Exclusivefocus
with the company. Virtually all 6,171
employee agents were vested in the Allstate Agent Pension fund at the time
their employment contract was severed,
and many of those are now approaching
retirement age.
Vesting in the pension plan required a
minimum of five years as an employee of
Allstate. Employment at Sears prior to
1995 could also be counted towards vesting eligibility for Sears employees who
left and became Allstate agents. Vested
former employee agents who were not
yet 65 when employment ended became
“terminated deferred vested Participants.”
Who is eligible to withdraw
benefits under the plan?
Normal retirement age is 65. Agents
hired before 1989 are eligible to receive
early retirement benefits payable at age
63. In addition, agents with 20-plus
years of continuous employment can receive early retirement benefits at age 55.
Early retirement benefits – paid prior
to age 65 – are calculated at a reduced
amount based on your actual age.
Current Allstate Exclusive Agent independent contractors can take their
retirement benefits as soon as they are
eligible based on age and years of employment. In other words, you may collect your benefit while still under contract as an EA independent contractor
agent.
The deferred vested benefit is payable
as an annuity. While several annuity payout options are available, it is important
to note that monthly payout amounts
are “frozen” and will not change as the
participant ages. Currently, a lump-sum
payout option is still available, but the
plan is under no obligation to continue
it. The lump sum is calculated by applying a conversion factor – which includes
interest rate and mortality assumptions
– to the straight life annuity benefit.
Consequently, the benefit amount under the lump sum option may increase
or decrease depending on the prevailing
assumptions in effect at the time a lump
sum is requested.
The Pension Protection Act (PPA) of
2006 changed the interest rate used to
calculate lump-sum payouts of the Agents
Pension Plan from the 30-year Treasury
Bond Rate to a corporate bond segmented
yield curve. As a result, there is no longer
a single interest rate used for lump-sum
payments. As a general rule, if the average interest rates decrease, the lump sum
equivalent increases, and vice versa.
If you receive your pension benefit in a
lump sum, you can “roll” it into an IRA
Spring 2013
to maintain the tax deferred status. This
must be a direct transfer or the Agents
Pension Plan will withhold 20% of the
payout for income tax purposes.
Social Security offset
Agents who became participants in
the plan prior to Dec 31, 1988 should be
aware that pre-1989 benefits contain a
Social Security offset which is calculated
based on estimated compensation earned
from 1951 through 1988.
You have the option of having your
actual compensation from 1951 through
1988 – as recorded by the Social Security
Administration – used in the calculation
instead of your estimated compensation.
Using your actual compensation in the
calculation of your pension benefit may
produce a higher pension benefit. More
importantly, using your actual prior compensation will never result in lowering
the pension benefit you are entitled to
receive and will not affect the Social Security benefit you are eligible to receive.
You can obtain your actual 1951
through 1988 earnings history by re-
questing your “Social Security Statement” from the Social Security website
at http://www.ssa.gov or by contacting
your local Social Security office. The information is free of charge. Remember to
request your “Social Security Statement,”
not your “Detailed Earnings Information.”
Then you must forward your compensation history to the Allstate Benefits
Center before requesting the distribution
of your pension. The Allstate Benefits
Center must receive your compensation history no later than four months
from your Payment Start Date.
Death Benefit
If you die as a terminated deferred
vested participant, a death benefit will
be payable to your spouse or other designated beneficiary. Participants should
be sure all beneficiary information is up
to date.
Estimated Death Benefit
Amount
Your estimated death benefit amount
– stated as a lump sum form of payment
– is payable if you die before commencing payment of the Plan benefit. You
can access your estimated death benefit
amount – calculated as of the prior yearend – by calling the Allstate Benefits
Center at 888-255-7772, where you will
be connected to an automated system.
Following the prompts, select the “Retirement and Investments” option and
then the “Pension” option. You will then
be connected with a benefits representative who will assist you with your request.
The value of your estimated death
benefit could increase or decrease from
time to time because the interest rate the
Plan uses to calculate lump-sum benefits
fluctuates over time.
Eligible agents can learn more about
retirement benefits at the Your Benefits
Resources™ website at http://resources.
hewitt.com/allstate or by calling the Allstate Benefits Center at 888.255-7772. By
creating a log-in, agents can view the Summary Plan Description, project retirement
benefits, compare the payout options, and
start the pension payment process. Ef
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