Final Average Earnings Plan

Page updated: April 8, 2003

Pension Formula After 7/1/03

The formula is based on the five highest consecutive years (60 months) of pensionable earnings out of your last ten years (120 months) of service.

*For the purposes of the example, assume Flight Attendant is age 60 with 35 years of participation (participation starts after first year of service, unless a former PAA Flight Attendant whose participation for purposes of pension benefit begins with the start date at United).

Step One:
Determine consecutive highest 60 months of pensionable earnings.

Example: Consecutive highest 60 months of last 120 months yields $240,000.00 of pensionable earnings.

Step Two:
Divide total of consecutive highest 60 months of pensionable earnings by five to determine annual average earnings.

Example: $240,000 ÷ 5 = $48,000 (annual average earnings)

Step Three:
Multiply annual average earnings times the pension multiplier of 1.48% (0.0148) times years of participation (capped at 35) to determine annual pension benefit.

Example: $48,000 × 0.0148 × 35 = $24,864 (annual benefit)

Step Four:
Divide Annual pension benefit by twelve to determine the monthly benefit.

Example: $24,864 ÷ 12 = $2,072 (monthly benefit)

Comparison of “Frozen” Pension Benefit and Final Average Earnings Plan:

In order to adhere to Federal law (ERISA) that protects the accrual of your pension to the date of any change, your pension benefit will be calculated under the current formula and "frozen" on June 30, 2003. This applies to all employees who are vested (5 years of service) on June 30, 2003. Going forward, your pension benefit will be calculated using the new formula and compared to the “frozen” pension to determine the higher benefit.

Once the higher benefit is identified, a 3% reduction (prorated monthly) for every year before age 60 will be applied to the full pension benefit. The 3% reduction is based on the date your pension benefit starts.

Return to Restructuring Agreement

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