Exclusivefocus Spring 2013 - National Association of Professional ...

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Agent Pension Plan Information for
Former Allstate Employee Agents
By Nancy Fish
For the most part, Allstate stopped
hiring employee agents in 1990.
Then in the year 2000, the company
terminated all its remaining employee
agent contracts, except for those located
in certain jurisdictions, such as the state
of New Jersey.
At the time, the company had 6,171
employee agents who were affected by
the “Preparing for the Future” initiative,
wherein agents were allowed to continue
their careers only if they agreed to become
independent contractors and suffer
the loss of their employee benefits.
Most of those affected were over the age
of forty.
Of the 6,171 affected agents, 3,772
converted to the EA agreement and continued
their agency relationship; 2,399
selected another option, and parted ways
with the company. Virtually all 6,171
employee agents were vested in the Allstate
Agent Pension fund at the time
their employment contract was severed,
and many of those are now approaching
retirement age.
Vesting in the pension plan required a
minimum of five years as an employee of
Allstate. Employment at Sears prior to
1995 could also be counted towards vesting
eligibility for Sears employees who
left and became Allstate agents. Vested
former employee agents who were not
yet 65 when employment ended became
“terminated deferred vested Participants.”
Who is eligible to withdraw
benefits under the plan
Normal retirement age is 65. Agents
hired before 1989 are eligible to receive
early retirement benefits payable at age
63. In addition, agents with 20-plus
years of continuous employment can receive
early retirement benefits at age 55.
Early retirement benefits – paid prior
to age 65 – are calculated at a reduced
amount based on your actual age.
Current Allstate Exclusive Agent independent
contractors can take their
retirement benefits as soon as they are
eligible based on age and years of employment.
In other words, you may collect
your benefit while still under contract
as an EA independent contractor
agent.
The deferred vested benefit is payable
as an annuity. While several annuity payout
options are available, it is important
to note that monthly payout amounts
are “frozen” and will not change as the
participant ages. Currently, a lump-sum
payout option is still available, but the
plan is under no obligation to continue
it. The lump sum is calculated by applying
a conversion factor – which includes
interest rate and mortality assumptions
– to the straight life annuity benefit.
Consequently, the benefit amount under
the lump sum option may increase
or decrease depending on the prevailing
assumptions in effect at the time a lump
sum is requested.
The Pension Protection Act (PPA) of
2006 changed the interest rate used to
calculate lump-sum payouts of the Agents
Pension Plan from the 30-year Treasury
Bond Rate to a corporate bond segmented
yield curve. As a result, there is no longer
a single interest rate used for lump-sum
payments. As a general rule, if the average
interest rates decrease, the lump sum
equivalent increases, and vice versa.
If you receive your pension benefit in a
lump sum, you can “roll” it into an IRA
32 — Exclusivefocus Spring 2013