EXHIBIT 10.5
Erie Insurance Group
RETIREMENT PLAN FOR EMPLOYEES
As Amended and Restated Effective December 31, 2000
TABLE OF CONTENTS
ARTICLE I - INTRODUCTION..................................................................................1
ARTICLE II - DEFINITIONS
2.1 "Accrued Pension"............................................................................2
2.2 "Actuary"....................................................................................2
2.3 "Administrator"..............................................................................2
2.4 "Affiliate"..................................................................................2
2.5 "Anniversary Date"...........................................................................2
2.6 "Annuity Starting Date"......................................................................2
2.7 "Beneficiary"................................................................................3
2.8 "Board of Directors" or "Board"..............................................................3
2.9 "Code".......................................................................................3
2.10 "Company"....................................................................................3
2.11 "Compensation"...............................................................................3
2.12 "Covered Employee"...........................................................................4
2.13 "Credited Service"...........................................................................4
2.14 "Date of Hire"...............................................................................4
2.15 "Date of Severance"..........................................................................4
2.16 "Earliest Retirement Age"....................................................................5
2.17 "Effective Date".............................................................................5
2.18 "Employee"...................................................................................5
2.19 "Employer(s)"................................................................................5
2.20 "ERISA"......................................................................................5
2.21 "Final Average Earnings".....................................................................5
2.22 "Highly Compensated".........................................................................5
2.23 "Hour of Service"............................................................................6
2.24 "Leased Employee"............................................................................7
2.25 "Maternity or Paternity Absence".............................................................7
2.26 "Normal Retirement Age"......................................................................8
2.27 "Normal Retirement Date".....................................................................8
2.28 "Participant"................................................................................8
2.29 "Period of Severance"........................................................................8
2.30 "Plan" or "Pension Plan".....................................................................8
2.31 "Plan Year"..................................................................................8
2.32 "Service"....................................................................................8
2.33 "Social Security Covered Compensation".......................................................9
2.34 "Test Compensation"..........................................................................9
2.35 "Top Paid Group".............................................................................9
2.36 "Total and Permanent Disability".............................................................10
2.37 "Trust Agreement"............................................................................10
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2.38 "Trustee"............................................................................................10
2.39 "Trust Fund" or "Fund"...............................................................................10
ARTICLE III - ADMINISTRATION OF THE PLAN
3.1 Pension Administrator........................................................................11
3.2 Powers.......................................................................................11
3.3 Delegation of Duties.........................................................................13
3.4 Administrator as Named Fiduciary.............................................................13
3.5 Conclusiveness of Various Documents..........................................................13
3.6 Actions to be Uniform........................................................................14
3.7 Liability and Indemnification................................................................14
3.8 Claims Review Procedure......................................................................14
3.9 Waiver of Participation......................................................................16
ARTICLE IV - SERVICE PROVISIONS
4.1 Service......................................................................................17
4.2 Credited Service.............................................................................17
4.3 Loss and Reinstatement of Service............................................................17
4.4 Transfer to Other Employment.................................................................18
4.5 Transfer From Other Employment...............................................................18
ARTICLE V - ELIGIBILITY FOR PENSIONS
5.1 Normal Retirement............................................................................19
5.2 Early Retirement.............................................................................19
5.3 Disability Retirement........................................................................19
5.4 Vesting......................................................................................20
ARTICLE VI - AMOUNT OF PENSION
6.1 Normal Retirement Pension....................................................................21
6.2 Early Retirement Pension.....................................................................21
6.3 Disability Retirement Pension................................................................21
6.4 Deferred Pension Upon Termination of Service.................................................22
6.5 Increases in Pension for Certain Retired Participants........................................23
6.6 Offset of Accruals by Plan Distributions.....................................................23
6.7 Non-Duplication of Benefits..................................................................23
6.8 Special Provisions Pertaining to Section 401(a)(17) Employees................................24
ARTICLE VII - COMMENCEMENT AND DURATION OF PENSIONS
7.1 Normal and Early Retirement Pensions.........................................................25
7.2 Disability Retirement Pension................................................................25
7.3 Deferred Vested Pension......................................................................26
7.4 Reemployment of a Retired Participant........................................................26
7.5 Automatic Surviving Spouse's Pension.........................................................27
7.6 Requirement for Spouse Consent...............................................................30
7.7 Optional Forms of Pensions...................................................................30
7.8 Payment of Small Pension.....................................................................32
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7.9 Repayment of Cashout on Reemployment.........................................................33
7.10 Delay in Commencement of Pension Payments....................................................34
7.11 Direct Rollover of Eligible Rollover Distributions...........................................35
7.12 Change to Pension Payments in Connection with Qualifying Event...............................36
ARTICLE VIII - DEATH BENEFITS
8.1 Death Prior to Retirement or Severance.......................................................41
8.2 Death Prior to Commencement of Early or Disability Pensions..................................41
8.3 Death Prior to Commencement of Vested Pensions...............................................42
8.4 Effect of Valid 100% Joint and Survivor Election.............................................43
8.5 Death On or After Annuity Starting Date......................................................43
8.6 Death Benefit for Vested Participants Who Terminated
After September 1, 1974 and Prior to August 23, 1984.........................................43
ARTICLE IX - TRUST FUND AND THE TRUSTEE
9.1 Trust Fund...................................................................................45
9.2 Irrevocability...............................................................................45
9.3 Contributions by the Company.................................................................45
9.4 Contributions by Participants................................................................46
9.5 Benefits Payable Only From Trust Fund........................................................47
9.6 Plan Expenses................................................................................47
ARTICLE X - BENEFIT LIMITATIONS
10.1 Maximum Limitation Under Section 415(b) of the Code..........................................48
10.2 Defined Benefit Plan and Defined Contribution Plan
Combined Limitation..........................................................................51
ARTICLE XI - MISCELLANEOUS PROVISIONS
11.1 Plan Non-Contractual.........................................................................53
11.2 Non-Alienation of Retirement Rights or Benefits..............................................53
11.3 Payment of Pension to Others.................................................................54
11.4 Prohibition Against Reversion................................................................54
11.5 Merger, Transfer of Assets or Liabilities....................................................54
11.6 Actuarial Equivalence........................................................................55
11.7 Change of Vesting Schedule...................................................................55
11.8 Controlled Group.............................................................................56
11.9 Severability.................................................................................56
11.10 Employer Records.............................................................................56
11.11 Application of Plan Provisions...............................................................56
11.12 Missing Participants.........................................................................56
11.13 IRC 414(u) Compliance Provision..............................................................57
ARTICLE XII - AMENDMENT AND TERMINATION
12.1 Amendment and Termination of the Plan........................................................58
12.2 Administration of the Plan in Case of Termination............................................58
12.3 Internal Revenue Service Limitations.........................................................59
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ARTICLE XIII - TOP-HEAVY PROVISIONS
13.1 General......................................................................................60
13.2 Definitions Relating to Top-Heavy Provisions.................................................60
13.3 Top-Heavy Plan Vesting Requirements..........................................................62
13.4 Top-Heavy Plan Minimum Benefit Requirements..................................................63
13.5 Required Adjustments.........................................................................64
13.6 Limited Application of this Article..........................................................65
ARTICLE XIV - JURISDICTION
14.1 Jurisdiction.................................................................................66
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Erie Insurance Group
RETIREMENT PLAN FOR EMPLOYEES
Effective December 31, 1946
As Amended and Restated Effective December 31, 2000
ARTICLE I
INTRODUCTION
The Erie Insurance Group adopted a Retirement Plan, effective December 31,
1946. Such Plan, which has been heretofore amended from time to time by action
of the Board of Directors in accordance with the provisions of the Plan, is
herein amended and restated.
This amendment and restatement of the Plan shall constitute an amendment,
restatement and continuation of the Plan. This amendment and restatement is
generally effective December 31, 2000. However, certain provisions of this
amendment and restatement are effective as of some other date. The provisions of
this amendment and restatement with stated effective dates prior to December 31,
2000 shall be deemed to amend the corresponding provisions, if any, of the Plan
as in effect before this amendment and restatement and all amendments thereto as
of such dates. Events occurring before the applicable effective date of any
provision of this amendment and restatement shall be governed by the applicable
provision of the Plan as in effect on the date of the event. The object of the
Plan is to provide retirement pensions for eligible employees.
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ARTICLE II
DEFINITIONS
For the purposes of this Retirement Plan for Employees, the following words and
phrases shall have the following meanings unless a different meaning is clearly
required by the context. Any terms herein used in the masculine shall be read
and construed in the feminine where they would so apply, and any terms used in
the singular shall be read and construed in the plural if again so applicable.
2.1 "Accrued Pension" shall mean a pension amount determined with respect to a
Participant in accordance with Section 6.2(a) of the Plan using the date
of determination for the date of early retirement.
2.2 "Actuary" shall mean the actuary or firm of actuaries chosen by, but
independent of the Company, who is, or in the case of a firm one or more
of whose members is, an enrolled actuary under the provisions of Section
3042 of the Employee Retirement Income Security Act of 1974.
2.3 "Administrator" shall mean the Pension Administrator appointed by the
Board under the provisions of Article III of the Plan.
2.4 "Affiliate" means any other employer which, together with the Company, is
a member of a controlled group of corporations or of a commonly controlled
trade or business (as defined in Code Sections 414(b) and (c) and as
modified, where appropriate, by Code Section 415(h)) or of an affiliated
service group (as defined in Code Section 414(m)) or other organization
described in Code Section 414(o). Each such Affiliate shall be treated as
an Affiliate only during such period as it is or was an Affiliate as
defined above.
2.5 "Anniversary Date" shall mean any December 31 occurring after the
Effective Date.
2.6 "Annuity Starting Date" shall mean the first day of the first period for
which an amount is received as an annuity (whether by reason of retirement
or other termination of Service). A Participant whose benefit is suspended
under any provision of the Plan shall be deemed not to have reached his
Annuity Starting Date until such benefit again
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becomes payable. The Annuity Starting Date for a benefit payable under
Section 7.10 shall be the applicable date described therein.
2.7 "Beneficiary" shall mean any person who, by reason of a designation made
by a Participant, is or will be entitled to receive any amount or benefit
hereunder upon the death of such Participant.
2.8 "Board of Directors" or "Board" shall mean the Board of Directors of the
Company.
2.9 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.10 "Company" shall mean Erie Indemnity Company, a corporation organized and
existing under the laws of Pennsylvania.
2.11 "Compensation" for any period shall mean the aggregate amount of base
salary received by a Covered Employee from the Employers during the
period. For this purpose, "base salary" shall exclude overtime
compensation, bonuses, and commissions, but shall include compensation
excluded from W-2 income because of salary reduction agreements in
connection with plans described in Section 125, 401(k), or, for periods on
and after January 1, 2001, 132(f)(4) of the Code, or resulting from
annuity or deferred compensation contracts. Effective for each Plan Year
beginning on and after December 31, 1989, in no event shall the amount of
Compensation taken into account under the Plan exceed the adjusted annual
limitation permitted under Section 401(a)(17) of the Code for such Plan
Year. Such adjusted annual limitation shall be, for each Plan Year
beginning on and after December 31, 1989 and prior to December 31, 1994,
$200,000 as adjusted for such year in the same manner as under Section
415(d) of the Code and, for each Plan Year beginning on and after December
31, 1994, $150,000 as adjusted for such year as provided under Section
401(a)(17)(B) of the Code. However, with respect to the determination of a
retirement pension or Accrued Pension for the 1993 Plan Year, the adjusted
annual limitation for the 1993 Plan Year will be assumed to apply to all
prior years.
For Plan Years beginning before January 1, 1997, in determining the
Compensation of a Covered Employee for purposes of the foregoing annual
limitation, the rules aggregating certain family members (as set forth in
Section 2.22) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the
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Covered Employee and any lineal descendent of the Covered Employee who has
not attained age 19 before the end of the calendar year. If, as a result
of the family aggregation rules, the adjusted annual limitation is
exceeded, then the limitation shall be prorated among the family members
in proportion to each individual's Compensation as determined under this
paragraph without regard to the adjusted annual limitation.
2.12 "Covered Employee" shall mean any Employee of an Employer, excluding:
(a) any such Employee whose employment is governed by the terms of a
collective bargaining agreement under which retirement benefits were
the subject of good faith bargaining,
(b) any such Employee who has voluntarily waived participation in the
Plan, and
(c) any such Employee who is compensated on an hourly basis.
Notwithstanding any provision of the Plan to the contrary, an individual
who an Employer determines to be a contract employee, independent
contractor, leased employee (including a Leased Employee as defined
hereunder), leased owner, leased manager, shared employee or person
working under a similar classification shall not become a Covered Employee
hereunder, regardless of whether any such individual is ultimately
determined to be a common law employee, unless and until the Employer
shall otherwise determine.
2.13 "Credited Service" shall mean a Participant's service determined in
accordance with Article IV hereof for the purpose of calculating the
amount of benefit earned under the Plan.
2.14 "Date of Hire" shall mean the date on which an Employee first commences
employment or reemployment and works at least one Hour of Service for an
Employer or an Affiliate.
2.15 "Date of Severance" shall mean the earliest to occur of the following
dates:
(a) date of retirement,
(b) date of voluntary employment termination,
(c) date of discharge by an Employer unless he is subsequently
reemployed and given pay back to the date of discharge,
(d) date of death,
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(e) the first anniversary of a date of absence from active employment
for any other reason; provided, however, that the second anniversary
of a date of absence from active employment shall be used for an
Employee who is absent by reason of a Maternity or Paternity Absence
which commenced on or after December 31, 1985, or who is absent by
reason of Total and Permanent Disability.
An Employee shall not incur a Date of Severance while he is in the active
service of the United States Armed Forces if his reemployment rights are
protected by law.
2.16 "Earliest Retirement Age" shall mean the earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits in
accordance with Section 5.1 or 5.2 hereof.
2.17 "Effective Date" shall mean December 31, 1946.
2.18 "Employee" shall mean any common-law employee of an Employer or an
Affiliate; provided, however, that for purposes of Section 2.22;
"Employee" shall include any self-employed individual performing services
for an Employer or Affiliate who is treated as an employee under Section
401(c)(1) of the Code.
2.19 "Employer(s)" shall mean the Company, Erie Family Life Insurance Company,
Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI
Service Corp., Erie Insurance Company of New York, Erie Insurance Property
& Casualty Company, Flagship City Insurance Company and any other
Affiliate which may adopt this Plan.
2.20 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
2.21 "Final Average Earnings" shall mean 1/36th of the aggregate Compensation
received during the thirty-six consecutive calendar months as a Covered
Employee which produces the greatest aggregate Compensation out of the one
hundred twenty calendar month period ending on the earlier of the date on
which the Participant retires or terminates employment with the Employers
or the date on which the Participant is no longer considered a Covered
Employee.
2.22 "Highly Compensated" shall mean, for years beginning on and after January
1, 1997, any Employee who is a more than five percent (5%) owner of an
Employer or both
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earned $80,000 or more in Test Compensation from the Employer in the prior
Plan Year (the "lookback year") and was member of the Top Paid Group for
such year; provided, however, that such $80,000 figure shall be adjusted
for cost of living at the same time and in the same manner as determined
under Code Section 415(d). For years beginning before January 1, 1997,
"Highly Compensated" shall mean any Employee who meets any of the
following requirements in either the lookback year or the current Plan
Year (the "determination year"):
(a) is a more than five percent (5%) owner of an Employer;
(b) earns $75,000 or more in Test Compensation;
(c) earns $50,000 or more in Test Compensation and is member of the Top
Paid Group;
(d) is an officer of an Employer (as described in Section 416(i) of the
Code) who earns Test Compensation of more than fifty percent (50%)
of the amount in effect under Section 415(b)(1)(A) of the Code for
such year; or
(e) is a former Employee who was Highly Compensated upon separation from
service prior to the determination year, performs no service for an
Employer during the determination year or was Highly Compensated at
any time after age 55.
In addition, the Test Compensation paid to any family member (spouse,
lineal ascendant or descendent and their spouses) of a more than five
percent owner or of one of the top 10 Highly Compensated Employees on the
basis of Test Compensation, shall be aggregated with the Test Compensation
of such Employee for the purposes of this definition. Notwithstanding the
foregoing, an Employee will not be Highly Compensated for the current year
merely by compensation or officer status, unless he is in the top 100
Employees by Test Compensation. The amounts indicated in (b) and (c) above
shall be adjusted for cost of living by the Secretary of the Treasury at
the same time and in the same manner as under Code Section 415(d). To the
extent permitted under regulations and other guidance promulgated by the
Internal Revenue Service, the Company may elect to determine the status of
Highly Compensated Employees on a basis other than that provided above.
2.23 "Hour of Service" shall include the following:
(a) each hour for which an Employee is directly or indirectly paid or
entitled to payment from an Employer or an Affiliate as an Employee
for the performance of duties during an applicable computation
period (these hours must be credited
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to the Employee in the computation period during which the duties
were performed and not when paid, if different); and
(b) each hour for which back pay, irrespective of mitigation of damages,
has been awarded or agreed to by an Employer or an Affiliate (these
hours must be credited in the computation period or periods to which
the award or agreement pertains rather than that in which the
payment, award or agreement was made); and
(c) each hour for which an Employee is directly or indirectly paid or
entitled to payment from an Employer or an Affiliate for reasons,
such as vacation, sickness or disability, other than for the
performance of duties (these hours shall be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor
regulations which are incorporated herein by reference).
2.24 "Leased Employee" shall mean any person (other than an Employee of an
Employer) who pursuant to an agreement between the Employer and any other
person ("leasing organization") has performed services for the Employer
(or for the Employer and related persons determined in accordance with
Section 414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one year and, for periods before January 1, 1997, such
services are of a type historically performed by employees in the business
field of the Employer or, for periods on and after January 1, 1997, such
services are performed under primary direction or control by the
recipient. Except as provided below, any person satisfying the foregoing
criteria shall be treated as an Employee. Contributions or benefits
provided a Leased Employee by the leasing organization which are
attributable to services performed for the Employer shall be treated as
provided by the Employer.
Notwithstanding the foregoing, a Leased Employee shall not be considered
an Employee of an Employer if: (i) such Leased Employee is covered by a
money purchase pension plan providing: (1) a nonintegrated employer
contribution rate of at least 10 percent of compensation, (2) immediate
participation, and (3) full and immediate vesting; and (ii) Leased
Employees do not constitute more than 20 percent of the Employer's
non-Highly Compensated workforce.
2.25 "Maternity or Paternity Absence" shall mean an absence from work by an
Employee for any period:
(a) by reason of pregnancy of the Employee,
7
(b) by reason of the birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in
connection with the adoption of such child by such Employee, or
(d) for purposes of caring for such child for a period immediately
following such birth or placement.
An absence will not be considered a "Maternity or Paternity Absence"
unless the Employee provides the Administrator with such timely
information as the Administrator may reasonably require to establish that
the absence from work is for one of the four permitted reasons outlined
above. Nothing in this Plan shall require an Employer to grant a paid
leave of absence to any Employee.
2.26 "Normal Retirement Age" of a Participant shall be age 65.
2.27 "Normal Retirement Date" of a Participant shall be the first day of the
month next following the month in which his sixty-fifth birthday occurs.
2.28 "Participant" shall mean any Covered Employee and any former Covered
Employee who is entitled to, or who is receiving, a retirement benefit or
deferred vested pension under the Plan.
2.29 "Period of Severance" shall mean the period of time between an Employee's
Date of Severance and the date as of which he performs his first Hour of
Service following reemployment.
2.30 "Plan" or "Pension Plan" shall mean this "Erie Insurance Group Retirement
Plan for Employees" as herein set forth with all amendments, modifications
and supplements hereafter made.
2.31 "Plan Year" shall mean any period of 12 consecutive calendar months next
preceding an Anniversary Date of the Plan.
2.32 "Service" shall mean an Employee's service determined in accordance with
Article IV hereof for the purposes of meeting the eligibility requirements
for a benefit under the Plan.
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2.33 "Social Security Covered Compensation" shall mean, for any Plan Year, the
average (without indexing) of the Social Security taxable wage bases in
effect for each calendar year during the 35-year period ending with the
last day of the calendar year in which the Participant attains (or will
attain) Social Security Retirement Age (as such term is defined in Section
10.1(a)(iv) hereof). In determining a Participant's Social Security
Covered Compensation for a Plan Year, the Social Security taxable wage
base for the current Plan Year and any subsequent Plan Year shall be
assumed to be the same as in effect for the Plan Year for which the
determination is being made. A Participant's Social Security Covered
Compensation shall be automatically adjusted for each Plan Year in
accordance with these provisions, up to and including the Plan Year in
which the Participant attains Social Security Retirement Age.
2.34 "Test Compensation" shall mean, for any Plan Year, an Employee's
compensation, reported under Sections 6041 and 6051 of the Code on Form
W-2, as paid by the Company or other Employer for the calendar year ending
with or within such Plan Year, including any amounts contributed pursuant
to a salary reduction election on behalf of a Covered Employee to a plan
described in Sections 125, 402(e)(3), 402(h)(1)(B), 403(b), 457(b) or, for
periods on and after January 1, 2001, 132(f)(4) of the Code for the period
in question. Test Compensation in any given year shall not exceed the
adjusted annual limitation in effect for such year (as set forth in
Section 2.11), provided that such limitation shall not be applied in
determining the top 10 Highly Compensated Employees subject to family
aggregation under the Plan (applicable to Plan Years beginning before
January 1, 1997) and for purposes of determining the status of an Employee
as a Highly Compensated Employee or Key Employee. To the extent permitted
under regulations and other guidance promulgated by the Internal Revenue
Service, the Company may elect to determine Test Compensation on a basis
other than that provided above.
2.35 "Top Paid Group" means all active Employees who, as of a given year, are
in the top twenty percent (20%) of the Company's work force on the basis
of Test Compensation for such year, excluding the following:
(a) employees who have not completed six (6) months of Service by the
end of such year;
(b) employees who work less than seventeen and one-half (17-1/2) hours
per week for such year;
(c) employees who normally do not work more than six (6) months in a
year;
9
(d) employees under age twenty-one (21) at the end of such year; and
(e) non-resident aliens who received no U.S. - source income for such
year.
For purposes of this Section, the Company's work force shall include
individuals employed by an Affiliate.
2.36 "Total and Permanent Disability" shall mean permanent incapacity resulting
in the Participant being unable to engage in any gainful employment or
occupation by reason of any medically demonstrable physical or mental
condition, excluding, however, (a) incapacity contracted, suffered or
incurred while the Participant was engaged in or which resulted from
having engaged in a felonious enterprise; and (b) incapacity contracted,
suffered or incurred in the employment of other than an Employer,
including self-employment.
2.37 "Trust Agreement" shall mean the trust agreement between the Company and a
Trustee as provided in Section 9.1, together with all amendments,
modifications and supplements, thereto.
2.38 "Trustee" shall mean the Trustee or Trustees designated under a Trust
Agreement including any successor or successors.
2.39 "Trust Fund" or "Fund" shall mean the retirement plan trust fund
established by the Company in accordance with Article IX.
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ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Pension Administrator
The Plan shall be administered by a Pension Administrator (the
"Administrator") who shall serve at the pleasure of the Board of
Directors. Any individual serving as the Administrator may resign by
delivering his written resignation to the Board. In the event of the
death, resignation or removal of the Administrator, the Board shall fill
the vacancy. In making the appointment, the Board shall not be limited to
any particular group, and nothing herein contained shall be construed to
prevent any Participant, director, officer, employee or shareholder of the
Employers from serving as the Administrator. The Administrator will not be
compensated from the Trust Fund for services performed in such capacity,
but the Company or Fund will reimburse such individual for expenses
reasonably incurred by him in such capacity. If the Board does not appoint
any individuals to the Administrator, then the Company shall act as the
Administrator.
Appointment by the Board shall be evidenced by a certified copy of the
resolution of the Board making such appointment, and copies of such
certified resolution shall be delivered to the Trustee and to such other
persons as may require such notice.
3.2 Powers
The Administrator will have full power to administer the Plan in all of
its details, subject, however, to the requirements of ERISA. This power
shall include having the sole and absolute discretion to interpret and
apply the provisions of the Plan to determine the rights and status
hereunder of any individual, to decide disputes arising under the Plan,
and to make any determinations and findings of fact with respect to
benefits payable hereunder and the persons entitled thereto as may be
required for any purpose under the Plan. Without limiting the generality
of the above, the Administrator is granted the following authority which
it shall discharge in its sole and absolute discretion in accordance with
Plan provisions as interpreted by the Administrator:
(a) To make and enforce such rules and regulations as it deems necessary
or proper for the efficient administration of the Plan, including
the modification of the claims procedure under Section 3.8 in
accordance with any regulations issued under Section 503 of ERISA.
(b) To interpret the Plan.
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(c) To decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan, his period of participation
and/or service under the Plan, his date of birth, his eligibility to
accrue a benefit under the Plan and to receive a distribution from
the Plan.
(d) To compute the amount of benefits which will be payable to any
Participant or other person in accordance with the provisions of the
Plan, and to determine the identity of the person or persons to whom
such benefits will be paid.
(e) To authorize the payment of Plan benefits and to direct cessation of
benefit payments.
(f) To appoint one or more investment managers to manage the investment
and reinvestment of the Fund and to enter into management contracts
on behalf of the Company with respect to such appointments. Unless
and until the Administrator appoints an investment manager with
respect to all or a specific portion of the Fund, the Trustee shall
have exclusive authority to manage and control all or such portion
of the Fund.
(g) To appoint, employ or engage such other agents, counsel accountants,
consultants and actuaries as may be required to assist in
administering the Plan.
(h) To establish procedures to determine whether a domestic relations
order is a qualified domestic relations order within the meaning of
Section 414(p) of the Code, to determine under such procedures
whether a domestic relations order is a qualified domestic relations
order and whether a putative alternate payee otherwise qualifies for
benefits hereunder, to inform the parties to the order as to the
effect of the order, and to direct the Trustee to hold in escrow or
pay any amounts so directed to be held or paid by the order.
(i) To determine whether the Plan has incurred a partial termination.
(j) To obtain from the Employers, Employees, Participants, spouses and
Beneficiaries such information as shall be necessary for the proper
administration of the Plan.
(k) To perform all reporting and disclosure requirements imposed upon
the Plan by ERISA, the Code or any other lawful authority.
(l) To take such steps as it, in its discretion, considers necessary
and/or appropriate to remedy any inequity under the Plan that
results from incorrect information received or communicated or as
the consequence of administrative error.
(m) To correct any defect, reconcile any inconsistency or supply any
omission under the Plan.
(n) To delegate its powers and duties to others in accordance with
Section 3.3.
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(o) To exercise such other authority and responsibility as is
specifically assigned to it under the terms of the Plan and to
perform any other acts necessary to the performance of its powers
and duties.
The Administrator at its discretion may either request the Company or
direct the Fund to pay for any or all services rendered by the Trustee and
by persons appointed, employed or engaged under Section 3.2(f) or (g) or
under the terms of the Trust Agreement.
The Administrator's interpretations, decisions, computations and
determinations under this Section 3.2 which are made in good faith will be
final and conclusive upon the Employers, all Participants and all other
persons concerned. Any action taken by the Administrator with respect to
the rights or benefits of any person under the Plan shall be revocable by
the Administrator as to payments or distributions not theretofore made,
pursuant to such action, from the Trust Fund; and appropriate adjustments
may be made in future payments or distributions to a Participant or
Beneficiary to offset any excess payment or underpayment previously made
to such Participant or Beneficiary from the Trust Fund. No ruling or
decision of the Administrator in any one case shall create a basis for a
retroactive adjustment in any other case prior to the date of written
filing of each specific claim.
3.3 Delegation of Duties
The Administrator may, from time to time, designate any individual to
carry out any of the responsibilities of the Administrator other than the
appointment of an investment manager(s). The individual so designated will
have full authority or such limited authority as the Administrator may
specify, to take such actions as are necessary or appropriate to carry out
the responsibilities assigned by the Administrator.
3.4 Administrator as Named Fiduciary
The Administrator will be a "named fiduciary" for purposes of section
402(a)(1) of ERISA with authority to control and manage the operation and
administration of the Plan.
3.5 Conclusiveness of Various Documents
The Administrator and the Company and its directors and officers will be
entitled to rely upon all tables, valuations, certificates and reports
furnished by any actuary,
13
accountant, counsel or other expert appointed, employed or engaged by the
Administrator or the Company.
3.6 Actions to be Uniform
Any discretionary actions to be taken under the Plan by the Administrator
will be nondiscriminatory and uniform with respect to all persons
similarly situated.
3.7 Liability and Indemnification
To the full extent allowed by law, the Administrator shall not incur any
liability to any Participant or Beneficiary, or to any other person, by
reason of any act or failure to act on the part of the Administrator if
such act or omission is not the result of the Administrator's gross
negligence, willful misconduct or exercise of bad faith. To the full
extent allowed by law, the Company agrees to indemnify the Administrator
against all liability and expenses (including reasonable attorney's fees
and other reasonable expenses) occasioned by any act or omission to act if
such act or omission is not the result of the Administrator's gross
negligence, willful misconduct or exercise of bad faith. Neither this
Section 3.7 nor any other provision of this Plan shall be applied to
invalidate, modify, or limit in any respect any contract, agreement, or
arrangement for indemnifying or insuring the Administrator against, or
otherwise limiting, such liability or expense, or for settlement of such
liability, to the extent such contract, agreement, or arrangement is not
precluded by the terms of Section 410 of ERISA.
3.8 Claims Review Procedure.
The Administrator shall be responsible for the claims procedure under the
Plan. An application for a retirement benefit or other benefit under the
Plan shall be considered a claim for purposes of this Section 3.8.
(a) Original Claim. In the event a claim of any Participant,
Beneficiary, alternate payee, or other person (hereinafter referred
to in this Section as the "Claimant") for a benefit is partially or
completely denied, the Administrator shall give, within ninety (90)
days after receipt of the claim (or if special circumstances, made
known to the Claimant, require an extension of time for processing
the claim, within one hundred eighty (180) days after receipt of the
claim), written notice of such denial to the Claimant. Such notice
shall set forth, in a manner calculated to be understood by the
Claimant, the specific reason or reasons for the denial (with
reference to pertinent Plan provisions upon which the denial is
based); an
14
explanation of additional material or information, if any, necessary
for the Claimant to perfect the claim; a statement of why the
material or information is necessary; on and after January 1, 2002,
a statement of the Claimant's right to bring a civil action under
Section 502(a) of ERISA; and an explanation of the Plan's claims
review procedure, including the time limits applicable to such
procedure. If the notice of denial is not furnished within the
required time period specified above, the claim shall be deemed to
be denied and the Claimant shall be permitted to proceed to the
review stage described in paragraph (b).
(b) Review of Denied Claim.
(i) A Claimant whose claim is partially or completely denied shall
have the right to request a full and fair review of the denial
by a written request delivered to the Administrator within
sixty (60) days of receipt of the written notice of claim
denial (or sixty (60) days after the date on which the claim
is deemed denied under paragraph (a) above), or within such
longer time as the Administrator, under uniform rules,
determines. In such review, the Claimant or his duly
authorized representative shall have the right to review, upon
request and free of charge, all documents, records or other
information relevant to the claim and to submit any written
comments, documents, or records relating to the claim to the
Administrator.
(ii) The Administrator, within sixty (60) days after the request
for review, or in special circumstances, such as where the
Administrator in its sole discretion holds a hearing, within
one hundred twenty (120) days of the request for review, will
submit its decision in writing. Such decision shall take into
account all comments, documents, records and other information
properly submitted by the Claimant, whether or not such
information was considered in the original claim
determination. The decision on review will be binding on all
parties, will be written in a manner calculated to be
understood by the Claimant, will contain specific reasons for
the decision and specific references to the pertinent Plan
provisions upon which the decision is based, will indicate
that the Claimant may review, upon request and free of charge,
all documents, records or other information relevant to the
claim and on and after January 1, 2002, will contain a
statement of the Claimant's right to bring a civil action
under Section 502(a) of ERISA. If
15
no decision is made within the time period specified above,
the claim shall be deemed to be denied on review.
(iii) If a Claimant fails to file a claim or request for review in
the manner and in accordance with the time limitations
specified herein, such claim or request for review shall be
waived, and the Claimant shall thereafter be barred from again
asserting such claim.
(c) Determination by the Committee Conclusive. The Administrator's
determination of factual matter relating to Participants,
Beneficiaries and alternate payees including, without limitation, a
Participant's Credited Service, Service and any other factual
matters, shall be conclusive. The Administrator and the Company and
its respective officers and directors shall be entitled to rely upon
all tables, valuations, certificates and reports furnished by an
actuary, any accountant for the Plan, the Trustee or any investment
managers and upon opinions given by any legal counsel for the Plan
insofar as such reliance is consistent with ERISA. The actuary, the
Trustee and other service providers may act and rely upon all
information reported to them by the Administrator and/or the Company
and need not inquire into the accuracy thereof nor shall be charged
with any notice to the contrary.
3.9 Waiver of Participation
It is the purpose of this Plan to provide for the accrual of retirement
benefits for all Covered Employees. Notwithstanding the foregoing, any
Covered Employee may waive participation in this Plan by executing a
Waiver of Participation on a form provided by the Administrator for such
purpose. Any Waiver of Participation shall be effective for the Plan Year
in which it is executed and shall be irrevocable. During any Plan Year for
which a Waiver of Participation is in effect, no Service, Credited Service
or Compensation shall be recognized under the Plan for the Covered
Employee.
16
ARTICLE IV
SERVICE PROVISIONS
4.1 Service
Service shall be used to determine a Participant's vested rights under the
Plan. An Employee shall receive Service for the period of time between his
Date of Hire and his Date of Severance, provided that no Service shall be
received for the period of continued absence between the first and second
anniversary of the date of first absence from work by reason of a
Maternity or Paternity Absence. Service shall be counted for full years
only. Service shall include any prior periods of Service that are
reinstated in accordance with Section 4.3 below. Service shall include any
Period of Severance which has continued for less than one year.
Notwithstanding the foregoing, Service (but not Credited Service) shall
include periods of absence granted under The Family and Medical Leave Act
of 1993, to the extent of the minimum service credit required by said Act.
4.2 Credited Service
Credited Service shall be used to compute the amount of a Participant's
benefit and to determine a Participant's eligibility for an early
retirement and a disability retirement under the Plan. Credited Service
shall be based on Service but shall not include (i) any period of Service
in which a Participant is not a Covered Employee, and (ii) any Period of
Severance; provided, however, that a Participant's Credited Service shall
include that Credited Service accumulated during the period in which the
Participant is eligible for a disability retirement pension (as determined
under Sections 5.3, 6.3 and 7.2 hereof). Solely for purposes of computing
the amount of a Participant's benefit under Section 6.1 and subject to the
foregoing provisions of this Section, Credited Service shall include a
year of credit for any fraction of a year of Service.
4.3 Loss and Reinstatement of Service
In the event a Participant incurs a Date of Severance prior to his
becoming eligible for a retirement benefit or deferred vested pension
under the Plan, he shall be deemed to receive a distribution equal to the
actuarial equivalent value of the entire vested pension earned through his
Date of Severance. In such a case, the Participant shall lose his Service
and Credited Service and his Accrued Pension shall be forfeited as of such
date of deemed distribution. If subsequently reemployed as a Covered
Employee, a
17
Participant shall, after again completing one year of Service, be
considered a Plan Participant retroactively as of such date of
reemployment and have his forfeited Service, Credited Service and Accrued
Pension reinstated if his last Period of Severance is less than the
greater of:
(a) five years, or
(b) the Participant's forfeited Service (including any periods of
Service previously reinstated under the provisions of this Section
4.3 or its predecessor).
4.4 Transfer To Other Employment
Upon the transfer of a Participant covered by the Plan to other employment
with an Employer or Affiliate whereby he ceases to be a Covered Employee
hereunder, his Accrued Pension based on his Credited Service and Final
Average Earnings as of the transfer date shall be frozen and Credited
Service shall cease to accrue for purposes of the Plan. In the event such
Participant remains in the employment of an Employer until such time as,
except for such transfer, he would have met the age, service and/or other
eligibility requirements for any pension under the Plan, such frozen
Accrued Pension shall become payable in accordance with the appropriate
provisions of the Plan as in effect on the date of transfer.
4.5 Transfer From Other Employment
Upon transfer or retransfer of an individual from other employment with an
Employer or Affiliate such that the individual becomes a Covered Employee
hereunder, his years of Service as otherwise computed under this Article
IV will include the period of his employment with an Employer or Affiliate
prior to such transfer or retransfer for the purpose of meeting the
vesting requirements under this Plan; provided, however, that only years
of Credited Service acquired while employed as a Covered Employee covered
under this Plan shall be used to compute the amount of any pension under
this Plan.
18
ARTICLE V
ELIGIBILITY FOR PENSIONS
5.1 Normal Retirement
A Participant whose employment with an Employer and all Affiliates is
terminated when or after he attains Normal Retirement Age shall be
eligible for a normal retirement pension in the amount as provided in
Section 6.1 hereof. A Participant's right to his normal retirement pension
shall be nonforfeitable upon the attainment of his Normal Retirement Age
provided he is an Employee on such date. A Participant continuing in
employment with an Employer after his Normal Retirement Date in a capacity
such that he completes 40 or more Hours of Service per month will be
provided with a notice incorporating the substance of the notification
described in Section 2530.203-3(b)(4) of the Code of Federal Regulations.
Such notice shall include a statement that the Participant's pension will
be suspended and permanently withheld for months in which he completes 40
or more Hours of Service. Any benefit accrual earned by a Participant for
any given Plan Year ending on or after the date on which the Participant
attains Normal Retirement Age shall be reduced (but not below zero) by the
amount of any actuarial adjustment which may be required in connection
with a delay in payment of a Participant's normal retirement benefit or
the suspension of benefits otherwise payable after the Participant attains
Normal Retirement Age.
5.2 Early Retirement
A Participant with 15 or more years of Credited Service whose employment
with an Employer and all Affiliates is terminated when or after he reaches
the age of 55 but prior to the attainment of age 65, shall be eligible for
an early retirement pension in the amount as provided in Section 6.2
hereof.
5.3 Disability Retirement
A Participant whose status as a Covered Employee is terminated due to his
Total and Permanent Disability after 15 or more years of Credited Service
and prior to the attainment of age 65, and who is eligible for and
receiving disability benefits under the Erie Insurance Group Long Term
Disability Plan shall be eligible for a disability retirement pension in
an amount as provided in Section 6.3 hereof beginning at his Normal
Retirement Date providing he remains Totally and Permanently Disabled up
to his Normal Retirement Date.
19
5.4 Vesting
A Participant with 5 years or more of Service and whose employment with an
Employer and all Affiliates is terminated at a time when he is ineligible
for any retirement pension under the Plan shall be eligible for a deferred
vested pension as computed under Section 6.4.
If a Participant is reemployed as a Covered Employee by an Employer after
having qualified for a deferred vested pension in accordance with this
Section 5.4, such Participant shall retain his right to receive such
deferred vested pension and he shall be reinstated with the Service and
Credited Service to which he was entitled at the time of his prior
termination of employment. Any benefits to which the Participant may be
entitled upon his subsequent retirement or termination of employment shall
be reduced actuarially, as provided in Section 7.4, to reflect any
deferred vested pension benefits paid prior to reemployment.
20
ARTICLE VI
AMOUNT OF PENSIONS
6.1 Normal Retirement Pension
Subject to the provisions of Section 7.1 and Article X, the monthly
pension of a Participant who is eligible for a normal retirement pension
under the provisions of Section 5.1 (as stated in the form of a life
annuity) shall be one-twelfth (1/12) of the result obtained by multiplying
the sum of (a) and (b) by (c), where:
(a) equals 1.0% of the Participant's Final Average Earnings not in
excess of Social Security Covered Compensation;
(b) equals 1.5% of the Participant's Final Average Earnings in excess of
Social Security Covered Compensation; and
(c) equals the Participant's Credited Service not in excess of 30 years.
In no event shall the overall permitted disparity limits of Section
1.401(l)-5 of the Income Tax Regulations be exceeded.
6.2 Early Retirement Pension
Subject to the provisions of Section 7.1 and Article X, the monthly early
retirement pension of a Participant eligible for an early retirement
pension under the provisions of Section 5.2 shall be, at the option of the
Participant, either (a) or (b) as set forth below:
(a) A deferred pension, commencing as of the Participant's Normal
Retirement Date, equal to the amount of pension, determined under
Section 6.1, to which he is entitled based upon his Credited Service
and Final Average Earnings as of his date of early retirement and
the level of Social Security Covered Compensation in effect on such
date.
(b) An immediate pension, commencing as of the month following the month
in which such Participant retires early, determined as provided in
(a) above, but reduced by 1/4 of 1 percent for each complete
calendar month up to 60 such months and by 3/8ths of 1 percent for
each complete calendar month in excess of 60 months, by which his
early retirement pension commencement date precedes his Normal
Retirement Date.
6.3 Disability Retirement Pension
Subject to the provisions of Section 7.2 and Article X, a Participant
eligible for disability benefits under the provisions of Section 5.3 and
under Title II of the Social Security Act shall receive a disability
retirement pension beginning as of his Normal
21
Retirement Date. Such disability retirement pension shall be in an amount
determined in accordance with Section 6.1 assuming that:
(a) service and Credited Service are granted for each calendar year (and
part thereof) during which he continues to be Totally and
Permanently Disabled and to qualify for Social Security disability
benefits, and
(b) his Compensation during his last full calendar year before his
termination due to disability continues unchanged from the calendar
year including his date of disability to the calendar year including
his Normal Retirement Date, and
(c) his Social Security Covered Compensation is based on the level in
effect at the time he becomes disabled.
6.4 Deferred Pension Upon Termination of Service
Subject to the provisions of Section 7.3 and Article X, the monthly
pension, commencing as of Normal Retirement Date, of a former Covered
Employee whose employment with an Employer and Affiliates has terminated
after he has become eligible for a deferred vested pension in accordance
with Section 5.4, shall be equal to the pension such Participant would
have been entitled to under Section 6.2(a) as of his termination of
employment, multiplied by a vesting percentage determined in accordance
with the table immediately below:
Years of Service Vesting Percentage
- ---------------- ------------------
Less than 5 0%
5 or more 100%
Except as otherwise provided under Section 8.1, any Participant having
less than five years of Service at the time of his death or other
termination of employment with the Employers or an Affiliate shall have no
vested rights under this Plan and neither he nor his spouse or Beneficiary
shall be entitled to any benefits under this Plan.
A former Covered Employee who is eligible for a deferred vested pension
and who is credited with 15 or more years of Credited Service may elect
(by written application) to commence his deferred vested pension in a
reduced amount at any time between the ages of 55 and 65, in which case
the monthly pension amount as determined above shall be reduced in
accordance with the provisions of subsection (b) of Section 6.2 based on
the number of months that his Annuity Starting Date precedes his Normal
Retirement Date.
22
6.5 Increase in Pension for Certain Retired Participants
(a) Notwithstanding the foregoing provisions of this Article VI and
effective for Plan payments made on or after January 1, 1996, the
monthly pension payable to a Qualified Pensioner (or to the
Beneficiary of a Qualified Pensioner) shall be increased by the
greater of five percent (5%) or twenty dollars ($20.00). For
purposes of this subsection (a), a "Qualified Pensioner" means a
Participant who retired under the normal retirement, early
retirement, or disability retirement provisions of the Plan prior to
January 1, 1994.
(b) Notwithstanding the foregoing provisions of this Article VI and
effective for Plan payments made on or after January 1, 1999, the
monthly pension payable to a Qualified Pensioner (or to the
Beneficiary of a Qualified Pensioner) shall be increased by the
greater of four percent (4%) or fifteen dollars ($15.00). For
purposes of this subsection (b), a "Qualified Pensioner" means a
Participant who retired under the normal retirement, early
retirement, or disability retirement provisions of the Plan and
commenced Plan payment prior to January 1, 1997.
6.6 Offset of Accruals by Plan Distributions
In the event distribution of benefits commence to an employed Participant
pursuant to Section 7.10 or for any other reason after the employed
Participant has attained his Normal Retirement Age, any increase in the
Participant's monthly benefit which accrues in any Plan Year in which such
distribution is made shall be reduced (but not below zero) by the
Actuarial Equivalent of total Plan benefit distributions made to such
Participant by the close of such Plan Year.
6.7 Non-Duplication of Benefits
(a) There shall be no duplication of any retirement benefit or deferred
vested pension benefit payable under this Plan, and any pension or
retirement benefit payable under any other qualified defined benefit
pension, retirement, or similar plan to which an Employer or
predecessor Employer of the particular Participant has contributed,
based upon the same period of service. Unless such other benefits
are clearly intended to be in addition to benefits under this Plan,
the Administrator shall make or cause to be made appropriate
adjustments in the retirement benefit or deferred vested pension
benefit payable under this Plan in respect to any Participant to
carry out the provisions of this paragraph.
23
(b) No benefit shall be payable to any Participant under more than one
Section of the Plan for the same period of time. No retirement
benefit or deferred vested pension benefit shall be paid to any
Participant while he is receiving benefits under a long-term
disability benefit contract or plan to which an Employer or
Affiliate has contributed.
6.8 Special Provisions Pertaining to Section 401(a)(17) Employees
Unless otherwise provided under the Plan, the Accrued Pension of each
Section 401(a)(17) Employee (as hereinafter defined) will be the greater
of the Accrued Pension determined for such Employee under (a) or (b)
below:
(a) The Employee's Accrued Pension determined with respect to the
benefit formula applicable for the Plan Year beginning on or after
December 31, 1994, as applied to the Employee's total years of
service taken into account under the Plan for the purpose of benefit
accruals; or
(b) The sum of: (i) the Employee's Accrued Pension as of the last day of
the last Plan Year beginning before December 31, 1994, frozen in
accordance with Section 1.401(a)(4)-13 of the Income Tax
Regulations, and (ii) the Employee's Accrued Pension determined
under the benefit formula applicable for the Plan Years beginning on
and after December 31, 1994, as applied to the Employee's years of
service credited for Plan Years beginning on and after December 31,
1994, for purposes of benefit accruals.
A "Section 401(a)(17) Employee" means a Covered Employee whose current
Accrued Pension as of a date on or after the first day of the first Plan
Year beginning on or after December 31, 1994, is based on Compensation for
a year beginning on or after December 31, 1994, that exceeded $150,000.
24
ARTICLE VII
COMMENCEMENT AND DURATION OF PENSIONS
7.1 Normal and Early Retirement Pensions
Any normal or early retirement pension shall be payable to a retired
Participant who has applied therefor in accordance with the rules
established by the Administrator, commencing as of the first day of the
month next following the date as of which he retires (or, if later,
commencing as of the first day of the month next following the date as of
which such application was made), and shall be payable monthly for the
remaining life of such retired Participant. The last payment to the
retired Participant under this form shall be for the month in which the
death of such retired Participant occurs. However, if the retired
Participant duly accepted the Automatic Surviving Spouse's Pension as set
forth in Section 7.5 or elected an optional form of pension in Section 7.7
and is receiving his retirement pension pursuant to such election, then
any pension payments to him and his surviving spouse or Beneficiary shall
be as set forth in Section 7.5 or 7.7, whichever applicable.
7.2 Disability Retirement Pension
A disability retirement pension shall be payable to a disabled Participant
who has applied therefor in accordance with the rules established by the
Administrator, commencing as of the Participant's Normal Retirement Date
(or, if later, commencing as of the first day of the month next following
the date as of which such application was made), provided the Participant
has remained continuously disabled (within the meaning of Section 5.3) up
to his Normal Retirement Date.
To ascertain whether a Participant retains his eligibility for a
disability retirement pension up to his Normal Retirement Date, he may be
required by the Administrator to submit to a medical examination at any
time prior to age 65, but not more often than semi-annually. If it is
determined by the Administrator that he is no longer totally and
permanently disabled on the basis of such an examination, or that he has
engaged or is engaging in gainful employment (except for purposes of
rehabilitation approved by the Administrator), or that prior to age 65 he
ceases to be eligible for disability benefits under the Social Security
Act, then his eligibility for a disability retirement pension will end
and, if reemployed, his Credited Service accumulated to that time shall be
reinstated. If such retired Participant is not reemployed by an Employer
upon the
25
termination of such disability, he shall be entitled to such pension as
may be available to him under Article V based on his then current age and
Credited Service.
In the event a person eligible for a disability retirement pension refuses
to submit to a medical examination as required by the Administrator, all
his rights to a disability retirement pension hereunder shall cease until
he submits to such examination.
Any disability pension shall be payable monthly for the remaining life of
such retired Participant. The last payment to the retired Participant
under this form shall be for the month in which the death of such retired
Participant occurs. However, if the Participant duly accepted the
Automatic Surviving Spouse's Pension as set forth in Section 7.5 or
elected an optional form of pension in Section 7.7 and is receiving his
retirement pension pursuant to such election, then any pension payments to
him and his surviving spouse or Beneficiary shall be as set forth in
Section 7.5 or 7.7, whichever applicable.
7.3 Deferred Vested Pension
A deferred vested pension shall be payable to a Participant who has met
the criteria provided in Section 5.4, commencing as of the Participant's
Normal Retirement Date (or, if later, commencing as of the first day of
the month next following the month proper application is made therefor),
or, if the Participant has at least 15 years of Credited Service as of his
termination of employment, commencing as of the first day of any month
between the ages of 55 and 65 in accordance with an eligible Participant's
election to receive a reduced amount under the provisions of Section 6.4.
A deferred vested pension shall be payable monthly for the remaining life
of the Participant. The last payment to the Participant under this form
shall be for the month in which the death of such Participant occurs.
However, if the Participant duly elected the Automatic Surviving Spouse's
Pension as set forth in Section 7.5 or elected an optional form of pension
in Section 7.7 and is receiving his deferred vested pension pursuant to
such election, then any pension payments to him and his surviving spouse
or Beneficiary shall be as set forth in Section 7.5 or 7.7, whichever
applicable.
7.4 Reemployment of a Retired Participant
The pension payable to any Participant receiving retirement benefits or
deferred vested pension benefits shall cease and be permanently withheld
if and when such Participant is reemployed by an Employer; provided,
however, that no pension shall be withheld by the Plan pursuant to this
Section 7.4 for any month during which such reemployed
26
Participant has been employed in a classification which is not covered
under the Plan or during which such Participant fails to complete 40 or
more Hours of Service. In addition, no payment shall be withheld by the
Plan pursuant to this Section 7.4 unless the Plan notifies the reemployed
Participant by personal delivery or first class mail during the first
calendar month in which the Plan withholds payments that his benefits are
suspended. Such notification shall contain a description of the specific
reasons why benefit payments are being suspended, a general description of
the Plan provisions relating to the suspension of payments, a copy of such
provisions, and a statement to the effect that applicable Department of
Labor regulations may be found in Section 2530.203-3 of the Code of
Federal Regulations. In addition, the suspension notification shall inform
the reemployed Participant of the Company's procedure for affording a
review of the suspension of benefits.
The retirement or deferred vested pension shall resume with the month
following subsequent retirement or termination of employment. Any
retirement or deferred vested pension payable upon such subsequent
retirement or termination shall be determined as provided in Article VI on
the basis of the Participant's Credited Service at the time of his
previous retirement or termination, plus his Credited Service as a
Participant during his period of reemployment; provided, however, that
such retirement or deferred vested pension shall be reduced by the
actuarial equivalent of the retirement or deferred vested pension
benefits, if any, that the Participant received prior to his reemployment.
Notwithstanding the foregoing, in no event shall a Participant's
retirement or deferred vested pension payable following his subsequent
retirement or termination be less than that retirement or deferred vested
pension payable to the Participant prior to his reemployment. In the
determination of the Final Average Earnings of a Participant who is
reemployed and who again becomes an active Participant, the thirty-six
month period to be considered shall be the number of months in such period
of reemployment prior to his subsequent date of retirement or termination,
plus such number of months immediately prior to his earlier retirement or
termination as shall total thirty-six months; provided that Final Average
Earnings shall in no case be diminished as a result of such period of
reemployment.
7.5 Automatic Surviving Spouse's Pension
A married Participant who is eligible to commence payments pursuant to the
normal, early or disability retirement provisions of the Plan or pursuant
to the deferred vested pension provisions of the Plan and whose benefit
may not be paid under the provisions
27
of Section 7.8 shall automatically be deemed to have elected, at the
commencement dates otherwise specified herein, an immediate monthly
pension during his lifetime with the provision that, following his death,
a monthly survivor's pension equal to 50 percent of his reduced pension
shall be payable to his surviving spouse during the further lifetime of
the spouse (the "Automatic Surviving Spouse's Pension"). Such pension
shall be actuarially equivalent to an immediate single life annuity. The
automatic election provided in this Section 7.5 shall become effective as
of the Participant's Annuity Starting Date; provided, however, that such
automatic election shall become effective only after the Participant and
his surviving spouse have been married for at least one year.
Notwithstanding the foregoing, if the Participant and his designated
spouse have not been married for at least one year as of the Participant's
Annuity Starting Date, the Automatic Surviving Spouse's Pension hereunder
shall nonetheless take effect, provided that, in the event the Participant
and his designated spouse do not remain married for a period of at least
one year the Plan shall treat the Participant as not having been married
on the Annuity Starting Date with the result that no survivor pension
shall be payable to the spouse (absent a Qualified Domestic Relations
Order to the contrary) and no retroactive correction shall be made to the
benefit payable to the Participant.
An unmarried Participant who retires pursuant to the normal, early or
disability retirement provisions of the Plan or pursuant to the deferred
vested pension provisions of the Plan and whose benefit may not be paid
under the provisions of Section 7.8 shall automatically be deemed to have
elected a monthly pension payable for his lifetime.
A Participant may prevent the automatic election provided in this Section
7.5 at any time within the "applicable election period" (as hereafter
defined) by executing a specific written rejection of such an election on
a form approved by the Administrator and filing it with the Administrator;
provided that such rejection shall not take effect unless the
Participant's spouse, if applicable, consents to such rejection in
accordance with Section 7.6 of the Plan. Any election to revoke the
Automatic Surviving Spouse's Pension and any spouse's consent thereto must
specify the particular optional form of benefit elected by the Participant
and, if applicable, must state the specific non-spouse Beneficiary or
Beneficiaries (including any class of Beneficiaries or any contingent
Beneficiaries) who may be entitled to any benefits upon the Participant's
death. Any subsequent change in optional form of benefit or in a
non-spouse Beneficiary selected
28
shall be valid only if accompanied by the written and witnessed consent of
the Participant's spouse in the manner described in Section 7.6.
During the period beginning no more than 90 days and ending no less than
30 days prior to the Participant's Annuity Starting Date, the
Administrator shall furnish to the Participant a written general
description of the automatic election provided in this Section 7.5. The
general description shall include a written explanation of the
Participant's and spouse's rights under the Automatic Surviving Spouse's
Pension, including the availability and effect of the election to reject
the Automatic Surviving Spouse's Pension. Such description shall also
provide information as to the material features of the optional forms of
benefit as well as a brief explanation of their relative values as
compared to the Automatic Surviving Spouse's Pension. In addition, in the
event the Participant's Annuity Starting Date is prior to his attainment
of Normal Retirement Age, such description shall inform the Participant of
his right to defer receipt of the Plan distribution. A Participant may
make and revoke his written rejection of an Automatic Surviving Spouse's
Option at any time and any number of times within the "applicable election
period". The "applicable election period" shall commence 90 days prior to
the Participant's Annuity Starting Date and shall end on the Participant's
Annuity Starting Date. Notwithstanding the foregoing, effective on and
after January 1, 1997, the written description identified in this
paragraph may be provided after the Participant's Annuity Starting Date
provided the Participant has at least 30 days following distribution of
the written description to reject the Automatic Surviving Spouse's Pension
and elect another form of payment permitted under the Plan. Distribution
to the Participant may commence after seven days have elapsed from the
date the Administrator provides the written description provided that the
Participant has received information that clearly indicates his right to
at least 30 days to consider the contents of the description, the
Participant affirmatively elects distribution and any required spousal
consent is satisfied.
A Participant who retires pursuant to the normal, early or disability
retirement provisions of the Plan or pursuant to the deferred vested
pension provisions of the Plan and who is entitled, under such provisions,
to a pension with a lump sum actuarial equivalent value not in excess of
$5,000 (or for distributions prior to December 31, 2001 was not in excess
of $3,500 at the time of that distribution or any prior distribution)
shall receive his pension in accordance with Section 7.8 hereof.
29
7.6 Requirement for Spouse Consent
Any election of a married Participant under Sections 7.5 and 7.7 (other
than an election to revoke a rejection of the Automatic Surviving Spouse's
Pension under Section 7.5) shall require the consent of the Participant's
spouse unless it is established to the satisfaction of the Administrator
that the consent required under this Section 7.6 may not be obtained:
(i) because there is no spouse or because the spouse cannot be
located,
(ii) because the Participant is legally separated from the spouse,
(iii) because the Participant has been abandoned by his spouse
(within the meaning of local law) and such Participant has a
court order to that effect, or
(iv) because of such other circumstances as the Secretary of the
Treasury may by regulations prescribe.
Any consent by a spouse shall be in writing acknowledging the effect of
such election or revocation and witnessed by a notary public or such Plan
representatives as may be designated for this purpose by the
Administrator. Any spouse's consent (or establishment that the spouse's
consent may not be obtained) shall be effective only with respect to such
spouse.
7.7 Optional Forms of Pensions
In lieu of a benefit in the form of payment determined in Section 7.5, a
Participant may, with the consent of his spouse as described in Section
7.6, elect an actuarially equivalent benefit described below. This
election is effective as of a Participant's Annuity Starting Date.
(a) Option A: 10-Year Certain and Life Option - A reduced monthly
retirement income is payable to the Participant during his remaining
lifetime, and upon his death prior to receiving payment for a period
equivalent to 120 months, monthly payments of the same reduced
amount will be made to his Beneficiary until the number of monthly
payments made to the Beneficiary, when added to the number of
monthly payments made to the Participant, is equivalent to 120
monthly payments.
(b) Option B: 15-year Certain and Life Option - A reduced monthly
retirement income is payable to the Participant during his remaining
lifetime, and upon his death prior to receiving payment for a period
equivalent to 180 months, monthly payments of the same reduced
amount will be made to his Beneficiary until the number of monthly
payments made to the Beneficiary, when added to the
30
number of monthly payments made to the Participant, is equivalent to
180 monthly payments.
(c) Option C: 50% Joint and Survivor Option - a reduced monthly
retirement income is payable to the Participant for his remaining
lifetime, and upon his death, monthly income of 50% of such reduced
monthly income previously paid to the Participant shall be paid to
his Beneficiary for as long thereafter as that person shall live.
(c) Option D: 100% Joint and Survivor Option - a reduced monthly
retirement income is payable to the Participant for his remaining
lifetime, and upon his death, monthly income of 100% of such reduced
monthly income previously paid to the Participant shall be paid to
his Beneficiary for as long thereafter as that person shall live.
(e) Option E: Joint and Survivor Pop-Up Option - a reduced monthly
retirement income is payable to the Participant for his remaining
lifetime, and upon his death, monthly income of either 50% or 100%
(as elected by the Participant) of such reduced monthly income
previously paid to the Participant shall be paid to the
Participant's spouse for as long thereafter as such spouse shall
live; provided, however, that in the event the spouse of the
Participant predeceases the Participant and such spouse's death
occurs within 60 months of the Participant's Annuity Starting Date,
the provisions of Section 7.12 shall apply. Notwithstanding any
provision of the Plan to the contrary (i) the Joint and Survivor
Pop-Up Option shall be available only with respect to a Participant
who has retired under the normal retirement provisions of Section
5.1 or the early retirement provisions of Section 5.2, and (ii)
actuarial equivalence of a benefit payable under the Joint and
Survivor Pop-Up Option shall be determined under Section 11.6;
provided, however, that in the event an annuity contract is
purchased from an insurance company with respect to such benefit,
actuarial equivalence shall thereafter be determined by reference to
the specific annuity contract which will be purchased by the Plan to
provide the monthly retirement income payable under this form of
payment.
Election of these options must be made during the applicable election
period described in Section 7.5. Except to the extent otherwise provided
under Section 8.4, if either the Participant or his Beneficiary dies after
the election of an option is made but before the Annuity Starting Date
such option will not become effective. If the Beneficiary shall die after
commencement of the joint and survivor pension, but before the death of
the retired Participant, the Participant shall continue to receive the
reduced pension payable
31
in accordance with such option. An option may be cancelled by the
Participant prior to the Annuity Starting Date. The effect of such
cancellation shall be to reinstate the life annuity specified in Section
7.1, 7.2 or 7.3, whichever applicable, or, if the Participant is married,
the Automatic Surviving Spouse's Pension under Section 7.5 (in which case
any subsequent option election must satisfy the requirements of Section
7.5). Except to the extent expressly permitted under the Plan, no election
regarding an optional form of payment may be made by a Participant
following the Participant's Annuity Starting Date. If the Beneficiary
designated by a Participant in connection with the election of an optional
form of benefit is not the spouse of the Participant, then the election
shall be effective only if the minimum distribution incidental benefit
requirements of Section 1.401(a)(9)-2 of the Income Tax Regulations are
satisfied with respect to such distribution.
7.8 Payment of Small Pension
Notwithstanding any provision of the Plan to the contrary, if the
actuarial equivalent present value of any retirement benefit, deferred
vested pension or survivor benefit does not exceed $5,000 (or for
distributions prior to December 31, 2001, did not exceed $3,500 at the
time of distribution or any prior distribution), the pension shall be paid
as soon as practicable in a lump sum equal to such present value. No lump
sum payments shall be made if the actuarial equivalent present value of
the benefit is in excess of these thresholds. For determinations made
prior to December 31, 1995, the actuarial equivalent present value of a
retirement benefit, deferred vested pension or survivor benefit for
purposes of this Section 7.8 shall be calculated on the basis of the
UP-1984 Table (reflecting a one-year setback for Participants and a
two-year setback for Beneficiaries) and the interest rates which would be
used (as of the beginning of the month in which the distribution occurs)
by the Pension Benefit Guaranty Corporation in determining the present
value of a lump sum distribution on plan termination. In no event shall
such actuarial equivalent present value be less than that calculated using
the same mortality table described above with a 6% interest rate. For
determinations made on and after December 31, 1995, the actuarial
equivalent present value of a retirement benefit, deferred vested pension
or survivor benefit shall be calculated and paid on the basis of the
"applicable mortality table" defined in Section 417(e)(3)(A)(ii)(I) of the
Code and the annual interest rate on 30-year Treasury securities for the
second calendar month preceding the month in which the distribution is
payable; provided, however, that in the event the Alternative Present
Value (as hereinafter defined) of the applicable benefit is a larger
amount, such larger amount shall be paid (provided such Alternative
32
Present Value calculation does not exceed $5,000 or, for periods prior to
December 31, 2001, $3,500). For purposes of this Section 7.8, the
"Alternative Present Value" of a retirement benefit, deferred vested
pension or survivor benefit shall be based on the Accrued Pension earned
by the Participant at the earlier of his termination of employment, or
December 30, 1995, determined by using the UP-1984 mortality table
(reflecting a one-year setback for Participants and a two-year setback for
Beneficiaries) and a 6% interest rate.
The provisions of this Section 7.8 shall likewise apply to any Participant
who terminates his employment with an Employer and all Affiliates prior to
his completion of such period of Service as is required for a deferred
vested pension under the Plan. In such case the terminated Participant
shall be deemed to receive a lump sum distribution of the actuarial
equivalent present value of his entire vested pension as of his date of
termination of employment. Subject to Section 7.9 hereof, a Participant
who receives a distribution (or deemed distribution) under this Section
7.8 shall lose his Credited Service (and Service, in the case of a deemed
distribution) under the Plan, shall forfeit his nonvested Accrued Pension
and shall no longer be considered a Participant hereunder after such date
of distribution (or deemed distribution).
7.9 Repayment of Cashout on Reemployment
Notwithstanding any provision of Section 7.8 to the contrary, in the event
a Participant described in Section 7.8 receives a distribution described
thereunder and is subsequently reemployed by an Employer as a Covered
Employee, such Participant's Credited Service and Accrued Pension earned
before his termination of employment shall be reinstated for all purposes
of the Plan if the Participant repays to the Plan the full amount of his
distribution with interest, compounded annually from the date of
distribution to December 30, 1988 at the rate of five percent (5%) per
annum and from December 31, 1988 to the date of repayment at the rate
determined for each Plan Year within such period under Section
411(c)(2)(C) of the Internal Revenue Code. With respect to a former
Participant who has been deemed to receive a distribution of his entire
vested pension upon his termination of employment in accordance with the
second paragraph of Section 7.8, such individual shall be deemed to have
repaid such distribution, with interest, as of his date of rehire and such
Participant's Service, Credited Service and Accrued Pension earned before
his termination of employment shall be reinstated as of such date. For
purposes of the foregoing, the period in which the Participant's repayment
or deemed repayment must occur shall end on the earlier of
33
the fifth anniversary of the Participant's reemployment or the date on
which the Participant's Period of Severance extends to five consecutive
years.
7.10 Delay in Commencement of Pension Payments
In no event shall payment of any pension under the provisions of this
Article VII commence as of a date that is later than 60 days after the
close of the Plan Year during which a Participant attains his Normal
Retirement Date or, if later, terminates his employment with an Employer
and Affiliates.
Notwithstanding the foregoing, with respect to a Participant who attains
age 70-1/2 before January 1, 1999 and any Participant who attains age
70-1/2 after January 1, 1999 but who has either terminated employment with
an Employer and all Affiliates prior to attaining such age or is a 5%
owner (for purposes of Section 416 of the Code), distribution of benefits
to the Participant must commence no later than the April 1st of the
calendar year following the calendar year in which the Participant attains
age 70-1/2 unless the Participant had attained age 70-1/2 prior to January
1, 1988. With respect to an employed Participant who attains age 70-1/2 on
or after January 1, 1999, distribution of benefits to the Participant
(other than a 5% owner), must commence no later than the April 1st of the
calendar year following the calendar year in which the Participant
retires. In the case of a Participant who retires in a calendar year after
the calendar year in which he attains 70-1/2 and who has not commenced
payments as of the first day of such later calendar year, the Plan benefit
accrued by the Participant shall be actuarially increased, to the extend
required by regulations, to take into account the period (commencing on
the April 1st of the calendar year following the calendar year in which
the Participant attains 70-1/2 and ending on the date payment commences)
during which the Participant did not receive any benefits under the Plan;
provided, however, that such actuarial increase, to the extent permitted
by regulations, shall reduce the benefit accrual otherwise occurring
during such period.
Notwithstanding any provision of the Plan to the contrary, all
distributions under the Plan shall be made in accordance with regulations
under Section 401(a)(9) of the Code (including Section 1.401(a)(9)-2 of
the Income Tax Regulations). Furthermore, those provisions reflecting
Section 401(a)(9) of the Code (as included here by reference if not
specifically stated) shall override any provision hereof inconsistent with
Section 401(a)(9).
34
7.11 Direct Rollover of Eligible Rollover Distributions.
Notwithstanding any provision of the Plan to the contrary, a Distributee
may elect, subject to provisions adopted by the Administrator which shall
be consistent with income tax regulations, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover to such plan. The
Administrator shall notify a Distributee of his right to elect a Direct
Rollover. Such notice shall be provided to the Distributee not less than
30 days before the vested Accrued Pension maintained on behalf of the
Distributee is distributed without the Distributee's affirmative election
to make or not make a Direct Rollover. A Distributee's affirmative
election to make or not make a Direct Rollover may be implemented by the
Administrator less than 30 days after the Distributee receives such notice
of his Direct Rollover rights, but only if the Administrator notifies the
Distributee that he has the right to consider the decision of whether or
not to elect a Direct Rollover for up to 30 days. A Distributee who is
eligible for an automatic lump sum distribution under Section 7.8 and who
has been given a timely notice and explanation of the election to have his
Eligible Rollover Distribution paid to an Eligible Retirement Plan will be
presumed to have elected to have his benefit paid directly to him if the
Distributee fails to make the election within 31 days of being notified of
his rights to make the election. For purposes of this Section:
(a) The term "Distributee" shall mean a Covered Employee or former
Covered Employee. In addition, such an individual's surviving spouse
or such an individual's spouse or former spouse who is an alternate
payee within the meaning of Section 414(p)(8) of the Code are
Distributees with respect to the interest of the spouse or former
spouse.
(b) The term "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the credit of
the Distributee other than: any distribution that is one of a series
of substantially equal periodic payments made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and his beneficiary, or for a
specified period of ten years or more; any distribution to the
extent such distribution is required under Section 401(a)(9) of the
Code; for periods on and after January 1, 1999, that portion of a
hardship withdrawal that is attributable to elective contributions
within the meaning of Section 1.401(k)-1(g) of Income Tax
Regulations; and the portion of any distribution that is not
includible in gross income.
(c) The term "Eligible Retirement Plan" shall mean an individual
retirement account or annuity, as described in Code Sections 408(a)
and 408(b),
35
respectively, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a
surviving spouse, an "Eligible Retirement Plan" is an individual
retirement account or annuity.
(d) The term "Direct Rollover" shall mean a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
7.12 Change to Pension Payments in Connection with Qualifying Event.
(a) In the event an Eligible Retiree (as hereinafter defined)
experiences a Qualifying Event (as hereinafter defined), the
provisions of this Section 7.12 shall apply, provided that the
Eligible Retiree furnishes the Administrator with reasonable notice
of the Qualifying Event within 120 days of the Qualifying Event and
provides such further information applicable hereunder as the
Administrator may reasonably require. For purposes of this Section:
(i) "Eligible Retiree" shall mean a Participant who has retired
under the normal retirement provisions of Section 5.1 or the
early retirement provisions of Section 5.2 and who, as of his
Annuity Starting Date, was either:
(A) legally married and commencing receipt of his retirement
income in the form of an Automatic Surviving Spouse's
Pension (as defined in Section 7.5), under the 100%
Joint and Survivor Option (with his spouse as
Beneficiary thereunder) or, on or after November 1,
1997, under the Joint and Survivor Pop-Up Option; or
(B) unmarried and commencing receipt of his retirement
income in the normal form of benefit provided under
Section 7.1 (a life annuity).
(ii) "Qualifying Event" shall mean an event described in (A), (B)
or (C) below:
36
(A) The spouse of an Eligible Retiree who is receiving
retirement income under the Joint and Survivor Pop-Up
Option under Section 7.7(e) predeceases the Eligible
Retiree and such spouse's death occurs within 60 months
of the Eligible Retiree's Annuity Starting Date;
(B) The marital status of an Eligible Retiree who is
receiving retirement income under any of the forms of
payment described in subparagraph (a)(i)(A) of this
Section 7.12 changes on or after September 1, 1997 and
within 120 months of his Annuity Starting Date due to
the Eligible Retiree's divorce, marital dissolution, or
legal separation; or
(C) The marital status of an Eligible Retiree who is
described under subparagraph (a)(i)(B) of this Section
7.12 changes on or after September 1, 1997 and within
120 months of his Annuity Starting Date due to the
Eligible Retiree's marriage.
(iii) "Qualifying Event Election Period" shall mean the 90-day
period beginning on the date on which the Eligible Retiree
timely notifies the Administrator of a Qualifying Event, as
provided in Section 7.12(a) above.
(iv) The determination of an Eligible Retiree's marital status and
the determination of whether a divorce, marital dissolution or
legal separation has occurred shall be made on the basis of
applicable state law unless preempted by federal law.
(b) Unless the Eligible Retiree timely makes an election under Section
7.12(c), in the event of the occurrence of a Qualifying Event
described in subparagraphs (a)(ii)(A) or (a)(ii)(B) of this Section
7.12, and contingent upon the Eligible Retiree's timely notification
to the Administrator, the retirement income payable to the affected
Eligible Retiree shall revert to the normal form of benefit
37
provided under Section 7.1 (a life annuity) as of the first day of
the month following the expiration of the Qualifying Event Election
Period; provided, however, that:
(i) the amount of such monthly life annuity shall be the actuarial
equivalent of the Eligible Retiree's benefit, determined as of
the time of calculation hereunder, under the form of payment
in effect as of his Annuity Starting Date; provided, however,
that such monthly amount shall not exceed the amount of the
monthly life annuity which the Eligible Retiree was entitled
to as of his Annuity Starting Date; and
(ii) in the case of a Qualifying Event described in subparagraph
(a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
the Eligible Retiree, as part of the division of marital
property (or other determination which is not subject to
modification under state law), expressly waives all interest
in the Eligible Retiree's pension under the Plan and such
waiver is incorporated into a document which satisfies the
formal requirements of a "Qualified Domestic Relations Order"
as defined in Section 414(p) of the Code; and
(iii) in the case of a Qualifying Event described in subparagraph
(a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
the Eligible Retiree shall secure such proof of insurability
as the Administrator may require, in its discretion; and
(iv) in the case of a Qualifying Event described in subparagraph
(a)(ii)(C) of this Section 7.12, the Eligible Retiree shall
secure such proof of insurability as the Administrator may
require, in its discretion.
(c) In the case of any Qualifying Event and contingent upon the Eligible
Retiree's timely notification to the Administrator, the affected
Eligible Retiree shall be permitted to elect, within the Qualifying
Event Election Period, to receive his
38
future retirement income from the Plan in any form of payment
offered under the Plan; provided, however, that:
(i) payments under any elected form of payment shall commence as
of the first day of the month next following the month in
which the Eligible Retiree makes full and complete application
to the Administrator in accordance with rules established by
the Administrator (such commencement date referred to herein
as the "Adjusted Commencement Date"); and
(ii) payments under any elected form of payment shall be the
actuarial equivalent of the Eligible Retiree's benefit,
determined as of the time of calculation hereunder, under the
form of payment in effect as of his Annuity Starting Date;
provided, however, that such monthly amount shall not exceed
the amount of the monthly benefit under the elected form of
payment which the Eligible Retiree was entitled to as of his
Annuity Starting Date; and
(iii) In the case of a Qualifying Event described in subparagraph
(a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
the Eligible Retiree, as part of the division of marital
property (or other determination which is not subject to
modification under state law), expressly waives all interest
in the Eligible Retiree's pension under the Plan and such
waiver is incorporated into a document which satisfies the
formal requirements of a "Qualified Domestic Relations Order"
as defined in Section 414(p) of the Code; and
(iv) In the case of a Qualifying Event described in subparagraph
(a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
the Eligible Retiree shall secure such proof of insurability
as the Administrator may require, in its discretion; and
39
(v) In the case of a Qualifying Event described in subparagraph
(a)(ii)(C) of this Section 7.12, the Eligible Retiree shall
secure such proof of insurability as the Administrator may
require, in its discretion; and
(vi) The provisions of Sections 7.5 and 7.6 hereof shall apply with
respect to any Eligible Retiree who is married as of the
Adjusted Commencement Date and, for purposes of such Sections
and Section 7.7, the Adjusted Commencement Date shall be
deemed the Annuity Starting Date for the elected form of
payment described in this Section 7.12(c); and
(vii) In no event shall more than one election be made under this
Section 7.12(c) by an Eligible Retiree with respect to any
single Qualifying Event nor shall any Eligible Retiree be
permitted to make more than two elections under this Section
7.12(c), irrespective of the number of Qualifying Events
affecting such Eligible Retiree; and
(viii) A Participant's status as an Eligible Retiree must be
independently satisfied with respect to each Qualifying Event
(substituting, where applicable, the Adjusted Commencement
Date for the Annuity Starting Date under Section 7.12(a)(i)).
40
ARTICLE VIII
DEATH BENEFITS
8.1 Death Prior to Retirement or Severance
Upon the death of a Participant prior to his Date of Severance, his
surviving spouse, if any, shall receive a monthly surviving spouse's
benefit under the assumption that the Participant had retired the day
prior to his death with an Accrued Pension under the Plan as determined in
accordance with the provisions of subsection 6.2(a), and under the further
assumption that the automatic election of a surviving spouse's benefit
pursuant to subsection 7.5 was in effect at the time of death. Such
surviving spouse benefit shall commence as of the first day of the month
following the Participant's death, shall be unreduced for early
commencement and shall be payable for the lifetime of the surviving
spouse.
For purposes of Sections 8.1, 8.2 and 8.3, the interest that is payable to
the Participant's surviving spouse shall be distributed over a period not
in excess of the life expectancy of such surviving spouse and shall
commence no later than the December 31 of the calendar year in which the
Participant would have attained age 65 (or the December 31 of the calendar
year immediately following the calendar year of the Participant's death,
if later).
8.2 Death Prior to Commencement of Early or Disability Pensions Upon the death
of a Participant after his Date of Severance, and prior to his Annuity
Starting Date and while the Participant is awaiting the commencement of
payment of either: (1) an early retirement pension pursuant to subsection
6.2(a) above, or (2) a disability pension after attainment of age 55 but
prior to the attainment of his Normal Retirement Date, his surviving
spouse, if any, shall receive a monthly surviving spouse's benefit under
the assumption that the Participant had retired the day prior to his death
with an Accrued Pension under the Plan as determined in accordance with
the provisions of subsection 6.2(a), and under the further assumption that
the automatic election of a surviving spouse's benefit pursuant to
subsection 7.5 was in effect at the time of death. Such surviving spouse's
benefit shall commence as of the first day of the month following the
Participant's death unless the surviving spouse elects a later
commencement date. Such benefit shall be reduced for early commencement in
accordance with the provisions of Section 6.2(b) and shall be payable for
the lifetime of the surviving spouse.
41
Upon the death of a disabled Participant who is awaiting commencement of
his pension at his Normal Retirement Date and who is under age 55 at the
time of his death, his surviving spouse, if any, shall receive a monthly
surviving spouse's benefit determined under the provisions of Section 8.1
assuming he died prior to his Date of Severance.
If a Participant terminates employment when eligible for a disability
retirement pension under Section 5.3 and at a time during which he is
receiving long term disability benefits under the Erie Insurance Group
Long Term Disability Plan, then service to date of death will be included
for benefit purposes.
8.3 Death Prior to Commencement of Vested Pensions
If a vested former Participant who has at least one Hour of Service on or
after December 31, 1976, and who has been married for at least one year on
his date of death, dies on or after August 23, 1984 but prior to his
Annuity Starting Date, then his spouse shall be provided with a
preretirement survivor annuity determined as follows:
(a) in the case of a Participant who dies after the date on which the
Participant attained his Earliest Retirement Age as though such
Participant had retired on the day before the Participant's date of
death, with an immediate benefit determined under the provisions of
Section 6.2(a) and payable under the Automatic Surviving Spouse's
Pension in Section 7.5 of the Plan, or
(b) in the case of a Participant who dies on or before the date on which
the Participant would have attained his Earliest Retirement Age, as
though such Participant had:
(i) separated from Service on the date of death,
(ii) survived to his Earliest Retirement Age,
(iii) retired with an immediate benefit determined under the
provisions of Section 6.4 and payable under the Automatic
Surviving Spouse's Option in Section 7.5 of the Plan at the
Earliest Retirement Age, and
(iv) died on the day after the day on which such Participant would
have attained the Earliest Retirement Age.
Under this Section 8.3, a monthly surviving spouse's benefit shall
commence as of the first day of the month following the later of the month
of the Participant's death or the month in which the Participant would
have attained his Earliest Retirement Age under the Plan unless the
surviving spouse elects a later commencement date (which shall not
42
be later than the December 31 of the calendar year in which the deceased
Participant would have attained age 65). Such surviving spouse's benefit
shall be reduced for early commencement in accordance with Section 6.2(b)
and shall be payable thereafter for the remainder of the surviving
spouse's lifetime.
8.4 Effect of Valid 100% Joint and Survivor Election
Notwithstanding the foregoing, in the event a Participant described in
Section 8.1, 8.2 or 8.3 above has made a valid election of Option D under
Section 7.7 and names his spouse as Beneficiary thereunder, the amount of
the Pre-Retirement Survivor Annuity shall be equal to the reduced monthly
amount which otherwise would have been payable to the Participant as
determined through application of the foregoing provisions of this Article
VIII.
8.5 Death on or After Annuity Starting Date
Upon the death of a Participant on or after his Annuity Starting Date,
payments, if any, to a Beneficiary shall be made in accordance with the
form of benefit in effect on the date of the Participant's death. If the
Beneficiary of the deceased Participant is entitled to receive the
remaining certain period payments from the 10-Year or 15-Year Certain and
Life forms of payment, the Administrator shall instruct the Trustee to pay
to such Beneficiary the actuarial equivalent value of the monthly payments
to which the Beneficiary is entitled in a single sum. Actuarial
equivalence for this purpose shall be determined under the assumptions set
forth in Section 7.8. If the Beneficiary under such form of payment is the
surviving spouse of the deceased Participant, then any amounts payable may
be converted to an actuarially equivalent life annuity to such spouse
provided the spouse requests payment in such form. Notwithstanding the
foregoing, in all events the deceased Participant's remaining interest in
the Plan shall be distributed at least as rapidly as under the form of
distribution in operation as of the date of the Participant's death.
8.6 Death Benefit for Vested Participants Who Terminated After September 1,
1974 and Prior to August 23, 1984
Any vested former Participant who terminated after September 1, 1974 and
prior to August 23, 1984 and whose benefits are not in pay status as of
August 23, 1984 is to be provided with the right to elect to receive such
benefits reduced and payable in the form of a qualified 50% joint and
survivor annuity as defined by ERISA and the Internal
43
Revenue Code as in effect prior to August 23, 1984, including the right to
revoke such coverage without spousal consent if such former Participant:
(a) completed at least one Hour of Service under the Plan after
September 1, 1974, and
(b) survives to his Annuity Starting Date.
44
ARTICLE IX
TRUST FUND AND THE TRUSTEE
9.1 Trust Fund
Subject to the provisions of this Section 9.1, the Company shall execute a
Trust Agreement with a Trustee (or Trustee) selected by the Company under
the terms of which a Trust Fund will be established for the purpose of
receiving and holding contributions made by the Company as well as
interest and other income on investments of such funds, and for the
purpose of paying the pensions and other benefits provided by the Plan and
paying any expenses incident to the operation of the Plan or Trust Fund to
the extent authorized by the Company. The Trustee is to manage and operate
the Trust Fund and to receive, hold, invest and reinvest the funds of the
Trust.
The Company shall determine the form and terms of such Trust Agreement,
may modify the Trust Agreement from time to time to accomplish the purpose
of the Plan, may remove any Trustee and may select any successor trustee.
Pensions under the Plan may alternatively be provided through the purchase
of annuity contracts issued by an insurance company. In lieu of a Trust
Agreement and Trust Fund, the Company may utilize a contract or contracts
of insurance for the purpose of receiving and holding contributions made
by the Company and for the purpose of paying pensions and other benefits
provided by the Plan, and in such event the references hereunder to "Trust
Agreement", "Trustee" and "Trust Fund" shall be deemed to be references to
"Insurance Contract", "Insurance Carrier" and "Insured Fund" respectively.
9.2 Irrevocability
The Trust Fund shall be used to pay pensions and other benefits as
provided in the Plan and, as provided in Section 9.6, those reasonable
expenses, taxes and fees incurred in the administration of the Plan and
Trust Fund which are not paid directly by the Company. No part of the
principal or income of the fund shall be used for or diverted to purposes
other than those provided in the Plan and no part of the Trust Fund shall
revert to the Company for the benefit of the Company, except as permitted
under Sections 9.3, 11.4 and 12.2 hereof.
9.3 Contributions by the Company
The Company will pay to the Trustee, subject to all the other provisions
of the Plan, such amounts as its Board determines, authorizes and directs;
provided that as a
45
minimum contribution, the Company intends to pay to the Trustee such
amounts as may be necessary to meet the minimum funding standards
established under the Employee Retirement Income Security Act of 1974. The
Company also intends to pay all expenses incident to the operation of the
Plan that are not paid directly from the Trust Fund. Any forfeitures
arising from the severance of employment or death of a Participant, or for
any other reason, shall be used to reduce the contributions of the Company
under the Plan and shall not be applied to increase the pensions or
benefits any Participant would otherwise receive under the Plan at any
time prior to the termination of the Plan.
Payments made to meet the minimum funding standards established under
ERISA shall, to the maximum extent permitted by valid provisions of ERISA,
be in complete discharge of the financial obligation of the Company under
this Plan. The pension benefits of the Plan shall, subject to valid
provisions of ERISA, be only such as can be provided by the assets of the
Trust and there shall be no further liability or obligation on any
Employer to make any further contributions to the Trust for any reason.
Except as prescribed by valid provisions of ERISA, the Company does not
guarantee continuity of payment of any benefits under the Plan. The
Company does not, in any event, guarantee that its contributions or the
Trust Fund will be sufficient to provide the benefits hereunder. All
rights of Participants and Beneficiaries, and of any person claiming under
any Participant or Beneficiary, shall be enforceable only against the
Trust Fund, except as ERISA may otherwise provide.
Notwithstanding any provisions of the Plan to the contrary, each
contribution made by the Company shall be conditioned upon the
deductibility of the contribution under Section 404 of the Code. If the
deduction of all or part of the contribution is disallowed, the
contribution shall, to the extent disallowed, be repaid to the Company
within one year after the date of disallowance. A contribution also may be
repaid to the Company, within one year after the date made, to the extent
it exceeded the full funding limitation or otherwise was made in error
because of a mistake in fact. Amounts returned under this Section 9.3
shall recognize any net losses attributable to the returned contribution
but shall not include any net earnings thereon.
9.4 Contributions By Participants
No Participant shall be required or allowed to make any contribution to
the Trust Fund established under the Plan.
46
9.5 Benefits Payable Only From Trust Fund
Payment of benefits under the Plan to Participants and Beneficiaries will
be made only by the Trustee from the funds or securities held by the Trust
and/or the annuity contract or contracts held by the Trust. Except as may
be provided by law, no liability for the payment of benefits to
Participants or their Beneficiaries hereunder shall be imposed upon the
Company, any Employer or the officers or shareholders of the Company or
any Employer, and there shall be no liability or obligation on the part of
the Company or any Employer, to make any further contributions in the
event of termination of the Plan.
9.6 Plan Expenses
All reasonable expenses, taxes and fees of the Plan, the Administrator and
the Trustee incurred in the administration of the Plan and Trust Fund
shall be paid from the Trust Fund; provided, however, that the obligation
of the Trust Fund to pay such expenses, taxes and fees shall cease to
exist to the extent that the same are paid, at the discretion of the
Company, by the Employers.
47
ARTICLE X
BENEFIT LIMITATIONS
10.1 Maximum Limitation Under Section 415(b) of the Code
Any provisions of the Plan to the contrary notwithstanding, benefits
payable under the Plan shall be subject to the following limitations:
(a) Maximum Annual Benefit:
(i) Subject to the exception below, the Annual Benefit (as
hereinafter defined) payable under this Plan for any
limitation year beginning on or after January 1, 1995 shall
not exceed the lesser of the Dollar Maximum of $120,000 or the
Percentage Maximum of 100% of the Participant's average
compensation for the period of three consecutive years during
which the Participant had the greatest aggregate compensation
from an Employer. Compensation, in determining a Participant's
Percentage Maximum, shall include the total of all amounts
paid to a Participant by an Employer during the limitation
year which are defined as wages within the meaning of Section
3401(a) of the Code and, for years beginning on and after
January 1, 1998, shall include amounts contributed pursuant to
a salary reduction election on behalf of the Participant to a
plan described in Sections 125, 402(e)(3), 402(h)(1)(B),
403(b) or 457(b) of the Code and, for periods on and after
January 1, 2001, to a plan described in Section 132(f)(4) of
the Code. Effective each January 1, the Dollar Maximum
described above shall be automatically adjusted to the new
dollar limitation for that calendar year as determined by the
Secretary of the Treasury pursuant to Section 415(d) of the
Code. To the extent permitted under Section 415 of the Code,
such adjusted limitation shall be applied to the benefits
payable to current retirees for that calendar year.
(ii) For purposes of this Section, "Annual Benefit" means the
benefit payable in the form of a straight-life annuity or a
qualified joint and survivor pension, with no ancillary
benefit, on an annualized basis. If a benefit is payable in
any other form, the Annual Benefit limitation shall be applied
by adjusting it to the equivalent of a straight-life annuity.
Effective for limitation years beginning before January 1,
1995, such actuarially equivalent straight-life annuity shall
be computed by using an interest rate equal to the greater of
5% or the Plan's interest rate and
48
mortality shall be determined by using the Plan's mortality
table. For limitation years beginning on and after January 1,
1995, the actuarially equivalent straight-life annuity is
equal to the greater of (i) the annuity benefit computed using
the Plan's interest rate and mortality tables for adjusting
forms of payment or (ii) the annuity benefit computed using an
interest rate of 5% and the "applicable mortality table" under
Code Section 417(e). In determining the actuarially equivalent
straight-life annuity for a benefit form subject to Code
Section 417(e)(3), the actuarial assumptions used shall be the
"applicable interest rate" and the "applicable mortality
table" under Code Section 417(e). For these purposes, the
lookback month shall be the second month preceding the Plan
Year that includes the Annuity Starting Date.
(iii) For purposes of the maximum limitation of this Article, all
qualified defined benefit plans (whether or not terminated)
maintained by an Employer or any Affiliate shall be treated as
a single plan. For purposes of applying the limitations of
Section 415 of the Internal Revenue Code, the terms "Employer"
and "Affiliate" shall be construed in light of Sections 414(b)
and (c) of the Code, as modified by Code Section 415(h).
(iv) If the Annual Benefit begins before a Participant's Social
Security Retirement Age (as hereinafter defined), the Dollar
Maximum (but not the Percentage Maximum) shall be actuarially
reduced so that it is the actuarial equivalent of an Annual
Benefit beginning at the Participant's Social Security
Retirement Age:
(A) If a Participant's Social Security Retirement Age is 65,
the Dollar Maximum for benefits commencing on or after
age 62 is determined by reducing the Dollar Maximum by
5/9 of one percent for each month by which benefits
commence before the month in which the Participant
attains age 65.
(B) If a Participant's Social Security Retirement Age is
greater than 65, the Dollar Maximum for benefits
commencing on or after age 62 is determined by reducing
the Dollar Maximum by 5/9 of one percent for each of the
first 36 months and 5/12 of one percent for each of the
additional months (up to 24
49
months) by which benefits commence before the month of
the Participant's Social Security Retirement Age.
For purposes of this Section, the term "Social Security
Retirement Age" shall mean the age used as the retirement age
of a Participant under Section 216(l) of the Social Security
Act, except that such Section shall be applied without regard
to the age increase factor and as if the early retirement age
under Section 216(l)(2) of such Act were 62.
(v) If the Annual Benefit begins before age 62, the Dollar Maximum
(but not the Percentage Maximum) shall be reduced so that it
is the actuarial equivalent of the Dollar Maximum beginning at
age sixty-two (62). For purposes hereof, the age adjusted
Dollar Maximum beginning prior to age 62 shall be determined
as the lesser of (i) the actuarial equivalent annual benefit
computed using the Plan's interest rate and mortality table
for early retirement benefits or (ii) the actuarial equivalent
annual benefit computed using an interest rate of 5% and the
"applicable mortality table" under Section 417(e) of the Code.
(vi) If the Annual Benefit begins after a Participant's Social
Security Retirement Age, the Dollar Maximum (but not the
Percentage Maximum) shall be increased so that it is the
actuarial equivalent of an Annual Pension beginning at such
age. For purposes hereof, the annual benefit beginning after
Social Security Retirement Age shall be determined as the
lesser of (i) the actuarial equivalent annual benefit computed
using the Plan's interest rate and mortality table for the
late retirement benefits or (ii) the actuarial equivalent
annual benefit computed using an interest rate of 5% and the
"applicable mortality table" under Section 417(e) of the Code.
(vii) For purposes of adjusting the Annual Benefit under paragraphs
(i), (ii), (iv), (v) and/or (vi), no adjustments shall be
taken into account before the year for which such adjustment
first takes effect.
(viii) The foregoing Section 415(b)(2)(E) actuarial assumptions
shall apply to all benefits under the Plan (including benefits
accrued before and after the RPA `94 effective date which
shall be the first limitation year beginning on or after
January 1, 1995).
50
(b) Adjustment for Plan Participation
If a Participant retires with less than 10 years of Plan
participation, the Dollar Maximum (but not the Percentage Maximum)
shall be reduced by multiplying such dollar limitation by a
fraction, the numerator of which is the Participant's years of
participation in the Plan and the denominator of which is 10.
(c) Adjustment for Years of Service
If a Participant has less than 10 years of Service, the maximum
Annual Benefit payable to the Participant shall be reduced by
multiplying such maximum Annual Benefit by a fraction, the numerator
of which is the Participant's years of Service or part thereof, and
the denominator of which is 10.
(d) Exception Benefits
(i) Subject to the limitations of paragraph (a), this Plan may pay
an Annual Benefit to any retired Participant which shall
exceed 100% of such Participant's average compensation,
provided that the Annual Pension shall not be in excess of
$10,000 for the current Plan Year and for all prior Plan
Years, and provided that the Participant shall not be or have
been at any time considered as an active participant in any
defined contribution plan maintained by an Employer or an
Affiliate.
(ii) In no event shall the adjustments for participation or Service
(pursuant to subsections (b) and (c), respectively) reduce the
limitation provided in paragraphs (a)(i) or (d)(i) hereof,
whichever is applicable, to an amount less than one-tenth
(1/10) of the applicable limitation as determined without
regard to such adjustments.
(iii) To the extent provided by the Secretary of the Treasury or his
delegate, the adjustment for Plan participation described in
subsection (b) herein shall be applied separately with respect
to each change in the benefit structure of the Plan.
10.2 Defined Benefit Plan and Defined Contribution Plan Combined Limitation
(a) Effective for limitation years beginning before January 1, 2000, in
any case in which a Participant is a participant in both a defined
benefit plan and a defined contribution plan maintained by an
Employer, benefits payable under this Plan and such other plans
shall not cause the limitations prescribed in Internal Revenue Code
Section 415(e) to be exceeded. Except as otherwise provided in
Internal Revenue Code Section 415(e), the sum of the "defined
benefit plan fraction" and the "defined contribution plan fraction"
shall not exceed 1.0.
51
(b) For the purposes of this Section 10.2:
(i) "defined benefit plan fraction" for any limitation year is a
fraction
(A) the numerator of which is the projected Annual Benefit
of each Participant under the Plan (determined as of the
close of such limitation year), and
(B) the denominator of which is the lesser of:
(1) the product of 1.25 multiplied by the Dollar
Maximum set forth in Section 10.1(a)(i) for such
year, or
(2) the product of 1.4 multiplied by the Percentage
Maximum set forth in Section 10.1(a)(i).
(ii) "defined contribution plan fraction" for any limitation year
is a fraction
(A) the numerator of which is the sum of the annual
additions under Section 415(c)(2) of the Code to the
Participant's account or accounts as of the close of the
limitation year, and
(B) the denominator of which is the sum of the lesser of the
following amounts determined for such year and for each
prior year of Service with an Employer:
(1) the product of 1.25 multiplied by the dollar
limitation in effect under Section 415(c)(1)(A) of
the Code for such year, or
(2) the product of 1.4 multiplied by the amount which
may be taken into account under Section
415(c)(1)(B) of the Code with respect to such
Participant under such plan for such year.
(c) For purposes of applying the limitations set forth in this Section
10.2, all qualified defined benefit plans (whether or not
terminated) ever maintained by the Company or an Affiliate shall be
treated as one defined benefit plan, and all qualified defined
contribution plans (whether or not terminated) ever maintained by
the Company or an Affiliate shall be treated as one defined
contribution plan.
(d) Notwithstanding any other provisions of this Plan, the rate of
benefit accrual under this Plan will be reduced to a level necessary
to prevent the limitations set forth in this Section 10.2 from being
exceeded with respect to any Participant; provided, however, if any
Participant's benefit accrual has been reduced as provided in this
Section, such reduction shall be restored effective as of the first
day of the first limitation year beginning on or after January 1,
2000.
52
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Plan Non-Contractual
No Participant or Beneficiary shall have any right or interest under the Plan
unless and until he becomes entitled thereto as provided in the Plan. The
adoption and maintenance of the Plan shall not be deemed to constitute a
contract between an Employer and any Employee. Inclusion in the Plan will not
affect an Employer's right to discharge or otherwise discipline Employees and
membership in the Plan will not give any Employee the right to be retained in
the service of an Employer nor any right or claim to a pension or other benefit
unless such right is specifically granted under the terms of the Plan.
11.2 Non-Alienation of Retirement Rights or Benefits
(a) Except as provided in Section 11.2(b) or 11.2(c), no benefit payable
under the Plan shall be subject in any manner to anticipation, sale,
transfer, assignment, pledge, encumbrance, security interest or
charge, and any action by way of anticipating, alienating, selling,
transferring, assigning, pledging, encumbering, charging or granting
a security interest in the same shall be void and of no effect; nor
shall any such benefit be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the person
entitled to such benefit.
(b) Section 11.2(a) shall not apply to the creation, assignment, or
recognition of a right to any benefit payable pursuant to a
qualified domestic relations order as defined in Section 414(p) of
the Code. The Company shall establish reasonable procedures to
determine the status of domestic relations orders and to administer
distributions under such orders which are deemed to be qualified
domestic relations orders. Such procedures shall be in writing and
shall comply with the provisions of Section 414(p) of the Code. To
the extent that, because of a qualified domestic relations order,
more than one individual is to be treated as a surviving spouse, the
total amount payable from the Plan as a result of the death of a
Participant shall not exceed the amount that would be payable from
the Plan if there were only one surviving spouse.
(c) Notwithstanding the provisions of Section 11.2(a), the Plan may
offset any portion of the Accrued Pension of a Participant or the
Participant's Beneficiary against a claim of the Plan arising:
53
(i) as a result of the Participant's or Beneficiary's conviction
of a crime involving the Plan; or
(ii) with regard to the Participant's or Beneficiary's violation of
ERISA's fiduciary provisions upon:
(A) the entry of any civil judgment, consent order, or
decree against the Participant or Beneficiary; or
(B) the execution of any settlement agreement between the
Participant or Beneficiary and the Department of Labor
or Pension Benefit Guaranty Corporation.
The provisions of this Section 11.2(c) shall apply only to orders,
judgments, decrees and settlements issued or entered into after August 5,
1997, and which expressly provide for such offset.
11.3 Payment of Pension to Others
In the event that the Administrator shall find that any Participant or
Beneficiary to whom a pension is payable, is unable to care for his
affairs because of illness, accident or incapacity, any payment due
(unless prior claim therefor shall have been made by a duly qualified
guardian or other legal representative) may, in the discretion of the
Administrator, be paid to the spouse, parent, child, brother or sister of
such Participant or Beneficiary or to any other person deemed by the
Administrator to be maintaining or responsible for the maintenance of such
Participant or Beneficiary. Any such payment shall be a payment for the
account of the Participant or Beneficiary and shall be a complete
discharge of any liability of the Plan and any Employer therefor.
11.4 Prohibition Against Reversion
Except as provided in Section 9.2 hereof, in no event shall any funds held
in the Trust Fund revert to the Company or be diverted to purposes other
than the exclusive benefit of Participants or their Beneficiaries prior to
the satisfaction of all liabilities under the Plan; provided, however,
that in the event the Plan is terminated, if, after all plan liabilities
are satisfied, there remains a balance in the Fund as a result of
actuarial error, such balance shall be returned to the Company.
11.5 Merger, Transfer of Assets or Liabilities
The Company may merge or consolidate the Plan with, transfer assets and
liabilities of the Plan to, or receive a transfer of assets and
liabilities from, any other plan without the
54
consent of any other Employer or other person, if such transfer is
effected in accordance with applicable law and if such other plan meets
the requirements of Code Sections 401(a) and 501(a), permits such transfer
or the receipt of such transfer and, with respect to liabilities to be
transferred from this Plan to such other plan, satisfies the requirements
of Code Sections 411(d)(6) and 417. This Plan may not be merged or
consolidated with any other plan, nor may any assets or liabilities of
this Plan be transferred to any other plan, unless the terms of the
merger, consolidation or transfer are such that each Participant in the
Plan would, if the Plan were terminated immediately after such merger,
consolidation or transfer, receive a pension having a value equal to or
greater than the pension he would have been entitled to receive if this
Plan had terminated immediately prior to the merger, consolidation or
transfer.
11.6 Actuarial Equivalence
Any determination of actuarial equivalence required by the provisions of
this Plan, when not otherwise specified in the Plan, shall be made on the
basis of the UP-1984 Table (reflecting a one year setback for Employees
and a two year setback for Beneficiaries) with an annual interest rate of
6%.
11.7 Change of Vesting Schedule
If the Plan's vesting schedule is amended or if the Plan is deemed amended
by an automatic change to or from a Top-Heavy Plan vesting schedule
(Section 13.3), each Participant with at least three years of Service with
an Employer may elect, within a reasonable period after the adoption of
the amendment or change, to have his nonforfeitable pension computed under
the Plan without regard to such amendment or change.
The period during which the election may be made shall commence at the
date the amendment is adopted or deemed to be made and shall end on the
latest of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the
amendment by the Company.
Notwithstanding the foregoing provisions of this Section 11.7, the vested
interest of any Participant on the date such amendment is effective shall
not be less than his vested interest under the Plan as in effect
immediately prior to the effective date of such change.
55
11.8 Controlled Group
For purposes only of determining eligibility to participate in the Plan
and eligibility for any pension (but not the amount thereof) under the
Plan, all employment with an Employer or an Affiliate shall be deemed to
be employment with an Employer in computing Hours of Service and Service.
11.9 Severability
If any provision of this Plan is held to be invalid or unenforceable, such
determination shall not affect the other provisions of this Plan. In such
event, this Plan shall be construed and enforced as if such provision had
not been included herein.
11.10 Employer Records
The records of a Participant's Employer shall be presumed to be conclusive
of the facts concerning his employment or non-employment, Service,
Credited Service and Compensation unless shown beyond a reasonable doubt
to be incorrect.
11.11 Application of Plan Provisions
This Plan shall be binding on all Participants and their spouses and
Beneficiaries and upon heirs, executors, administrators, successors, and
assigns of all persons having an interest herein. The provisions of the
Plan in no event shall be considered as giving any such person any legal
or equitable right against the Company, an Employer or an Affiliate, any
of its officers, employees, directors, or shareholders, or against the
Trustee, except such rights as are specifically provided for in the Plan
or hereafter created in accordance with the terms of the Plan.
11.12 Missing Participants.
If a Participant who has left employment with the Company and Affiliates
has failed to file an application for benefits within 120 days after
attainment of his Normal Retirement Date, the Administrator shall treat
the Participant's retirement benefit or vested Accrued Pension as
forfeited; provided, however, that such Accrued Pension shall be
reinstated retroactive to the commencement date set forth below upon the
subsequent filing of a completed application with the Administrator and
shall commence within ninety (90) days after such application is filed.
For purposes of this Section 11.12, the commencement date shall be the
later of:
56
(a) sixty (60) days after the close of the Plan Year during which the
Participant attained his Normal Retirement Date; and
(b) sixty (60) days after the close of the Plan Year during which the
Participant terminated employment with the Hospital or Affiliate.
11.13 IRC 414(u) Compliance Provision
Notwithstanding any provision of the Plan to the contrary and effective as
of December 12, 1994, contributions, benefits and service credit with
respect to qualified military service shall be provided in accordance with
Section 414(u) of the Code.
57
ARTICLE XII
AMENDMENT AND TERMINATION
12.1 Amendment and Termination of the Plan
The Company hopes and expects to continue the Plan, but expressly reserves
the right at any time and from time to time, without the consent of
Participants,
(a) to reduce or discontinue payments to the Plan;
(b) to terminate the Plan;
(c) to amend the Plan, retroactively or otherwise, in such manner as it
may deem necessary or advisable in order to qualify the Plan and any
trust established in conjunction therewith under the provisions of
Sections 401(a) and 501(a) of the Code, or any similar Code
provisions from time to time in effect;
(d) to amend the Plan in any other respect, provided, however, that no
such amendment shall forfeit or diminish the interest of any
Participant in the Trust Fund to the extent that such interest has
become vested in such Participant, except as may be permitted under
the Code or ERISA.
Any such amendment to or termination of this Plan shall be evidenced by an
instrument executed on behalf of the Company by the President. Such
instrument shall recite at which time the amendments contained therein
shall become effective.
Promptly after an amendment of this Plan shall have become effective, the
Company shall cause a copy of such amendment to be filed with the
Administrator and with the Trustee, and the Administrator shall take such
steps as it may deem appropriate to reasonably communicate the amendment
to Participants.
12.2 Administration of the Plan in Case of Termination
Upon termination of the Plan, as determined by the Pension Benefit
Guaranty Corporation, the assets of the Trust Fund shall be liquidated and
distributed in accordance with Section 4044 of ERISA and applicable
regulations issued thereunder. In the event of the termination of the Plan
or a partial termination of the Plan, the rights of all affected
Participants to Accrued Pensions determined as of the date of such
termination or partial termination, to the extent funded, or as further
adjusted by the Pension Benefit Guaranty Corporation as of such date,
shall be nonforfeitable. Notwithstanding the foregoing, upon Plan
termination, the benefit of any Highly Compensated Employee shall be
limited to a benefit that is nondiscriminatory under Section 401(a)(4) of
the Code.
58
Upon termination of the Plan, after the satisfaction of all liabilities of
the Plan to its Participants, Beneficiaries and surviving spouses, the
Company shall receive any remaining amount resulting from any variations
between actual requirements and actuarially expected requirements.
12.3 Internal Revenue Service Limitations
(a) Except in such cases where the circumstances described in subsection
(b) apply, the annual payments under the Plan to any one (1) of the
twenty-five (25) highest paid Highly Compensated Employees (and
Highly Compensated former Employees), ranked by Test Compensation,
shall not exceed the sum of:
(i) those payments that would be made on behalf of such Employee
under a single life annuity that is the Actuarial Equivalent
of the sum of the Employee's Accrued Pension and the
Employee's Other Benefits (as defined in subsection (c) below)
under the Plan; and
(ii) those payments the Employee is entitled to receive under a
social security supplement.
(b) The provisions of subsection (a) above shall not apply if:
(i) after payment of all such benefits to an Employee described in
subsection (a), the value of Plan assets equals or exceeds
110% of the value of current liabilities (as defined in Code
Section 412(l)(7) under the Plan;
(ii) the value of all such benefits to an Employee described in
subsection (a) above is less than one percent of the value of
current liabilities under the Plan prior to the payment of all
such benefits to such Employee; or
(iii) the value of all such benefits to an Employee described in
subsection (a) does not exceed $5,000 or such other amount as
may be prescribed under Section 411(a)(11)(A) of the Code as
the maximum amount that may be paid out without the
Participant's consent.
(c) For purposes of this Section 12.3, "Other Benefits" shall include
any loan in excess of the amounts set forth in Code Section
72(p)(2)(A), any periodic income, any withdrawal values payable to a
living Employee and any death benefits not provided for by insurance
on the Employee's life. "Other Benefits" for this purpose shall not
include any social security supplements.
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ARTICLE XIII
TOP-HEAVY PROVISIONS
13.1 General
Notwithstanding any provision of this Plan to the contrary, the provisions
of this Article XIII shall apply with respect to any Plan Year provided
the Plan is a Top-Heavy Plan (as defined in Section 13.2(c) below) for
such Plan Year.
13.2 Definitions Relating to Top-Heavy Provisions
For purposes of this Article XIII:
(a) "Key Employee" means any Employee or former Employee (and the
beneficiaries of such an Employee or former Employee) who, during
the current Plan Year or any of the four preceding Plan Years, is:
(i) an officer of an Employer having annual Test Compensation
greater than 50 percent of the amount in effect under Section
415(b)(1)(A) of the Code for any such Plan Year; for purposes
of this definition, no more than the lesser of (1) 50
Employees or (2) the greater of three Employees or 10% of the
Employees shall be treated as officers;
(ii) an owner (or considered an owner under Section 318 of the
Code) of one of the ten largest interests in an Employer if
such individual's annual Test Compensation exceeds the dollar
limitation under Section 415(c)(1)(A) of the Code;
(iii) a five percent (5%) owner (or considered an owner under
Section 318 of the Code) who owns more than five percent (5%)
of the outstanding stock of an Employer or who owns Employer
stock possessing more than five percent (5%) of the total
combined voting power of all stock of an Employer;
(iv) a one percent (1%) owner (or considered an owner under Section
318 of the Code) who has annual Test Compensation from an
Employer of $150,000 or more, and who owns more than one
percent (1%) of the outstanding stock of an Employer or who
owns Employer stock possessing more than one percent (1%) of
the total combined voting power of all stock of an Employer.
(b) "Determination Date" means, with respect to any Plan Year, the last
day of the immediately preceding Plan Year.
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(c) "Top-Heavy Plan" means a plan where, as of the Determination Date,
the present value of the cumulative accrued benefits (including any
part of any accrued benefit distributed in the five-year period
ending on the Determination Date) under the Plan for Key Employees
exceeds sixty percent (60%) of the present value of the cumulative
accrued benefits (including any part of any accrued benefit
distributed in the five-year period ending on the Determination
Date) under the Plan for all Employees.
(i) If this Plan is in a Required Aggregation Group, each Plan of
an Employer required to be in such group will be a Top-Heavy
Plan if such group is a Top-Heavy Group.
(ii) If this Plan is in a Permissive Aggregation Group which is not
a Top-Heavy Group, no Plan of an Employer in such group will
be a Top-Heavy Plan.
(d) "Required Aggregation Group" means:
(i) each plan of an Employer in which a Key Employee is a
participant, and
(ii) each other plan of an Employer which enables a plan in which a
Key Employee is a participant to meet the requirements of
Internal Revenue Code Sections 401(a)(4) or 410. A terminated
plan must be aggregated with other plans of an Employer if it
was maintained within the five-year period ending on the
Determination Date for the Plan Year in question and it would,
but for the fact it terminated, be part of a required
aggregation group for such Plan Year.
(e) "Permissive Aggregation Group" means any plan of an Employer which
is not part of the Required Aggregation Group, but is treated as if
it were at the option of the Company, provided such group continues
to meet the requirements of Internal Revenue Code Sections 401(a)(4)
and 410.
(f) "Top-Heavy Group" means any Required or Permissive Aggregation
Group, if as of the Determination Date, the sum of the present value
of cumulative accrued benefits for Key Employees under all defined
benefit plans included in such Group and the aggregate of the
accounts of Key Employees under all defined contribution plans
included in such Group exceeds sixty percent (60%) of the similar
sum determined for all Employees.
(g) "Present Value of Accrued Benefits" shall be determined as of the
most recent valuation date within a twelve-month period ending on
the Determination Date,
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but for the purposes of determining whether this Plan is a Top-Heavy
Plan, shall not include:
(i) any rollover contribution initiated by the Employee.
(ii) any accrued benefit or account attributable to an Employee who
is not a Key Employee, but who was a Key Employee in any prior
Plan Year. To the extent that a Key Employee is deemed to be a
Key Employee if he meets the definition of Key Employee within
any of the four (4) preceding Plan Years, this provision shall
apply following the end of such period of time.
(iii) Any accrued benefit or account attributable to any individual
who has not performed any services for an Employer at any time
during the five-year period ending on the Determination Date.
Solely for purposes of determining if the Plan is a Top Heavy Plan
as described above, the Present Value of Accrued Benefits shall be
determined by using the single accrual method which is used for all
plans of the Company and of any Affiliate. If no such single method
exists, benefits shall be determined as if they accrued not more
rapidly than the lowest accrued rate permitted under Section
411(b)(1)(C) of the Code.
(h) "Valuation Date" means December 31.
(i) "Non-Key Employee" means any Employee who is not a Key Employee.
13.3 Top-Heavy Plan Vesting Requirements
(a) For any Plan Year in which the Plan is a Top-Heavy Plan, the
following vesting schedule will apply to benefits derived from
Employer contributions. The nonforfeitable interest in a
Participant's accrued benefit will be determined as follows:
Nonforfeitable Percentage of
Years of Service Accrued Benefit
----------------- ----------------------------
0 but less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
This Section 13.3 does not apply to any Participant who does not
have an Hour of Service after the Plan becomes a Top-Heavy Plan.
62
(b) If the vesting schedule under the Plan shifts in or out of the above
schedule due to determination of whether or not the Plan is a
Top-Heavy Plan, such shift shall be an amendment to the vesting
schedule and Section 11.7 shall apply.
13.4 Top-Heavy Plan Minimum Benefit Requirements
(a) For any Plan Year in which the Plan is determined to be a Top-Heavy
Plan, each Non-Key Employee Participant who has completed a year of
service will accrue a minimum annual benefit (derived from Employer
contributions and expressed as a life annuity beginning at Normal
Retirement Age and determined without regard to any Social Security
contribution or benefit).
(b) Such accrual of a minimum annual benefit will be the lesser of:
(i) Two percent (2%) of the Participant's highest average
compensation for the five consecutive years during which the
Participant had the greatest compensation from the Employer
multiplied by the years of service as defined in (c) below, or
(ii) Twenty percent (20%) times the Participant's highest average
compensation for the five consecutive years during which the
Participant had the greatest compensation from an Employer.
(c) (i) For the purpose of the accrual of minimum annual benefit, year
of service shall mean a year of Credited Service as defined in
Article IV, but will exclude years when the Plan was not a
Top-Heavy Plan for any Plan Year ending during such year of
Credited Service, as well as years of Credited Service in a
Plan Year beginning before December 31, 1984. Notwithstanding
the above, each Non-Key Employee Participant who has completed
1,000 Hours of Service in a year in which the Plan is a
Top-Heavy Plan shall be entitled to the minimum annual benefit
regardless of the level of such Non-Key Employee's
compensation.
(ii) The compensation required to be taken into account for
purposes of this Section 13.4 is the compensation described in
Section 10.1(a)(i) of the Plan; provided, however, that
compensation shall not exceed the adjusted annual limitation
in effect for the given year (as set forth in Section 2.11)
and compensation in years which end in a Plan Year beginning
before December 31, 1984 and compensation in years after the
close of the last Plan Year in which the Plan is a Top-Heavy
Plan shall be disregarded.
63
(d) Notwithstanding any other provision of the Plan, an Employee shall
be a Participant for the purposes of this Section 13.4, and a
Participant shall be entitled to an accrual under this Section 13.4,
even if he would not otherwise be entitled to receive an accrual or
would have received a lesser accrual for the year because the
Non-Key Employee Participant is not employed on a specified date.
(e) If the annual retirement pension payable under the Plan to a
Participant who has accrued a minimum annual benefit under this
Article XIII commences at a date other than at Normal Retirement
Age, such Participant shall receive at least an amount that is the
actuarial equivalent of the minimum annual benefit commencing at
Normal Retirement Age as provided under this Section 13.4 using a
five percent (5%) interest rate assumption for such determination.
If the annual retirement pension payable to a Participant who has
accrued a minimum annual benefit under this Article XIII is in a
form other than a single life annuity, such Participant shall
receive an amount that is not less than the minimum annual benefit
as otherwise provided in this Section 13.4 adjusted to be the
actuarial equivalent of a single life annuity commencing at the same
age using the provisions of Section 11.6 of the Plan for such
determination.
(f) In the case of Employees covered under both this Plan and any other
plan maintained by an Employer, this Plan will provide the top heavy
minimum benefit which shall be offset by the benefit, if any,
provided under such other plans.
13.5 Required Adjustments
In any year which begins before January 1, 2000 and in which the Plan is
determined to be a Top-Heavy Plan, either (a) or (b) below must apply.
(a) The defined benefit plan fraction of Section 10.2(b)(i) of the Plan
and the defined contribution plan fraction of Section 10.2(b)(ii) of
the Plan shall be applied by substituting 1.0 for 1.25, OR
(b) (i) This paragraph may apply if this is determined to be a
Top-Heavy Plan, but would not be a Top-Heavy Plan if ninety
percent (90%) were substituted for sixty percent (60%) in
Section 13.2(c) of this Plan, and
(ii) The following modifications to Section 13.4, Minimum Benefit
Requirements, are adopted:
64
In Section 13.4(b)(i): use 3% instead of 2%, and in Section
13.4(b)(ii): increase 20% by one percentage point for each
year (up to 10) for which the Plan was considered under this
Section 13.5.
13.6 Limited Application of this Article.
The sole purpose of this Article is to comply with Section 416 of the Code
and the terms of this Article shall be interpreted, applied, and if and to
the extent necessary, shall be deemed modified so as to satisfy solely the
minimum requirements of Section 416 of the Code and the regulations
promulgated with respect thereto.
65
ARTICLE XIV
JURISDICTION
14.1 Jurisdiction
The provisions of the Plan shall be construed in accordance with ERISA,
the Code, and, where not superseded by ERISA, the laws of the Commonwealth
of Pennsylvania.
Executed at Erie, Pennsylvania, this 10th day of December, 2001.
ERIE INDEMNITY COMPANY
By: /s/ Stephen A. Milne
---------------------
President