Your Pension Benefit:  How the Pension Plan Works

The CSI Pension Plan is designed to provide you with a monthly benefit during your retirement. The Plan is a defined benefit plan - meaning the pension you will receive at retirement is defined (or predetermined) based on a formula. You can predict your monthly retirement payment amount based on this formula.

Both you and your school contribute a certain percentage of your pay toward the Pension Fund. In some cases, your school pays your share of the contribution to the Plan in addition to their own. These contributions are structured so that, along with the investment earnings, they provide enough income to pay for the benefits participants have earned at retirement.

CSI manages the money in the Pension Fund by investing all contributions - both yours and your school’s. You do not have any responsibility for making investment decisions - CSI assumes all of the investment risk associated with the contributions. This is different from the way other types of retirement plans work, such as a 401(k) or IRA, where you are responsible for managing your own investments and must assume all risk associated with your choices. With those types of plans, you really don’t know how much income you can count on at retirement, because it depends on your individual investment results.

You are vested in your CSI pension benefit after five years of service. This means you own the benefit you have earned in the Plan to-date. This benefit is called your accrued benefit. (Until you are vested you have a right to your employee contributions - or contributions made on your behalf - with interest.) When you are eligible to retire, you have a variety of payment options available under the Pension Plan so you can choose, for example, to retire early or cover your spouse after your death.

We will provide more information about the Pension Plan and how it works during the upcoming meetings.

Full Issue: No. 161 - February 25, 2004

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