Understanding Benefit Eligibility Age Requirements

Benefit eligibility age requirements are typically based on an employee's age at benefit commencement date (BCD). That is, if a plan's normal retirement age is 65, a participant becomes eligible for normal retirement benefits at 65, regardless of when he separates from service.

For example, Jeremy and Kevin are twins working at your company. Jeremy terminates at age 40, while Kevin keeps working until he's 65. Both become eligible for normal retirement benefits on the same day.

If you use benefit eligibility in your grouping for other functions, you'll probably set up the benefit eligibility criteria based on BCD. For example, you have separate benefit formulas for early retirement, available at age 55, and normal retirement. Eligibility for early retirement is part of the group criteria for the early retirement benefit formula. If you base early retirement eligibility on the age at BCD, the system can calculate early retirement benefits for terminated vested employees who are at least 55 years old. If eligibility were based on the age at event date, you could never calculate early retirement benefits for someone who separated from service before reaching early retirement age.

If you do not use benefit eligibility as grouping criteria, you might choose to use the age at event date in determining eligibility. This way the calculation tells you the benefits for which an employee is eligible at the time of separation from service.

To set up the right definitions, you must decide what information you want from the benefit eligibility function. Also, remember that you can use different ages in different definitions.