Rule of 85
What is the Rule of 85?
If you begin your benefit early, there is a reduction to your Primary pension benefit. The Rule of 85 allows qualifying workers to reduce or eliminate the reduction to their Primary Retirement pension on the amount earned prior to June 30, 2014.
Who qualifies for the Rule of 85?
To be eligible for the Rule of 85 you must:
- have accrued Primary Retirement Benefits prior to June 30, 2014
- be vested in the Concordia Retirement Plan (CRP)
- be at least 55 years of age
- have your age plus years of CRP participation as an active worker equal or exceed 85 at the time your creditable service ceases (hence, the Rule of 85!)
How does the Rule of 85 affect benefits?
For workers who retire early (before their Normal Retirement Age), their Primary pension benefit is subject to a 6% reduction for each full year (or .5% per month) the benefit is taken prior to their Normal Retirement Age.
If the Rule of 85 applies, your age at the time you begin your primary pension benefit is also a factor:
| Age when you begin primary pension payment | Primary pension benefit | Effect on primary pension benefit |
|---|---|---|
| Age 62 to Normal Retirement Age | Pension earned prior to June 30, 2014 | No reduction |
| Pension benefit earned after June 30, 2014 | 6% reduction for each year prior to normal retirement age | |
| Age younger than 62 | Pension benefit earned prior to June 30, 2014 | 6% reduction for each year prior to age 62 |
| Pension benefit earned after June 30, 2014 | 6% reduction for each year prior to normal retirement age | |
| Normal Retirement Age | Pension benefit earned prior to June 30, 2014 | No reduction |
| Pension benefit earned after June 30, 2014 | No reduction |
How does the Rule of 85 affect me?
While this is a complicated topic, you can easily see how the Rule of 85 will affect your retirement benefits. Log into the member benefit portal and use Retirement Connection (located on the Financial Wellness page) to estimate and view your projected retirement pension benefits. If you are eligible for the Rule of 85, it will automatically be applied to the estimates that appear.
To see the impact of beginning your benefits early, you will need to run two estimates: one using an early retirement age with your benefits payable immediately and a second with the same retirement age, but receiving your benefits at your Normal Retirement Age. Then you can compare the results.
Can someone help me understand the Rule of 85?
Our Financial Education Department would be happy to help walk you through the Rule of 85 and assist you with any other retirement question you may have. To reach a Financial Educator, call 888-927-7526 ext. 6865 or email [email protected]