Dan has worked steadily for one employer in his local union from 1977 through 2004. During that time period Dan has earned 28 years of Pension Credit. His employer has contributed to the National Pension Fund at a variety of contribution rates. The highest rate was $1.00 per hour, which began in 2002. Since Dan has earned at least 1,500 hours at the $1.00 contribution rate, the benefit level of $36.57 per year of credit will apply (view view Schedule A). Therefore, Dan's benefit for 28 years of credit is $1,023.96 ($36.57 x 28 years).
If Dan works 1,500 hours in 2005, he earns another year of credit. Before the new plan changes, Dan's total benefit would have been $1,060.53 ($36.57, the benefit level in effect prior to 2005 for a contribution rate of $1.00 per hour x 29 years of credit). However, because benefits during 2005 will actually be earned at a lower level, and any contribution rate increase will not apply to credit earned prior to 2005, Dan's benefit will now be computed in two parts. The first part is Dan's benefit as of December 31, 2004. That was $1,023.96 (see the preceding paragraph). For the one year of credit Dan earned in 2005 at a contribution rate of $1.00 per hour, he will now earn a benefit of $9.14 (view view Schedule B). So, at the end of 2005, Dan's total benefit is $1,033.10 ($1,023.96 + $9.14) based on 29 years of credit.
Let's assume that during 2005, his local union contribution rate is increased by 25%, from $1.00 per hour to $1.25 per hour. If Dan works 1,500 hours in 2006, he will earn an additional $18.29 in a monthly pension (view view Schedule C) for a total benefit of $1,051.39 ($1,033.10 as of the end of 2005 plus $18.29 earned in 2006) based on 30 years of credit.
Since Dan's local union increased its contribution rate by 25% on or before January 1, 2007, work during 2007 will qualify for the 75% restoration effective January 1, 2007. If Dan works 1,500 hours in 2007, he will earn an additional $27.44 in a monthly pension (view view Schedule D) for a total benefit of $1,078.83 ($1,051.39 as of the end of 2006 plus $27.44 earned in 2007) based on 31 years of credit.