I would like to know what a PEP (pension equity plan) comes from?

Question

I contribute to a 403B and in the right hand column it says my pep balance is $11,256.00.
Where is that money coming from? Do I get it when I retire in 25 yrs?

Answer 1

A pension equity plan (PEP) is a defined benefit pension plan. Almost PEP plans are completely funded by the employer and do not accept employee contributions. So it is not unusual for you to be completely unaware that the plan exists.

Pension Equity was a term that someone came up with in the early 1990's and has no bearing to what you actually get out of the program. In basic terms a pension equity plan provides you with a benefit at termination or retirement equal to some percentage times the average of your recent earnings times the years of service you have. Here's an example:

Suppose the plan provides 10% of your last five years of earnings times your years of service.

If your pay averaged $50,000 over the last five years and you worked for your employer for 10 years, you could expect ot get $50,000 times 10% times 10 or $50,000 when you quit or retire.

That amount is payable in a lump sum but almost all plans allow you to take it as an annuity (life income). The $50,000 benefit might translate into $5,000/year for life.

So you should expect to see the $11,256 grow in each future years with growth in your earnings and length of service.

The plan is backed by assets set aside by your employer and insured by the Pension Benefit Guarantee Corporation.

Answer 2

Pension Equity Plan

Answer 3

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RE:
I would like to know what a PEP (pension equity plan) comes from?
I contribute to a 403B and in the right hand column it says my pep balance is $11,256.00.
Where is that money coming from? Do I get it when I retire in 25 yrs?

Answer 4

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