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Premiums (continued)
Your employer pays the premium for your membership in Benefits for Life. The premium amount is equal to 6% of your annual compensation (see box below).
Premiums are based solely on your annual compensation as reported to MMBB each year. Therefore, you need to report changes in your compensation as soon as possible. Failing to do so will have an adverse effect on the level of plan benefits you receive.
| The 6% premium payment is put to work this way: |
| 3% |
for retirement account |
| 1 ¼% |
for special benefits, including disability |
| 1% |
administrative fee |
| ¾% |
for group term life insurance |
Your Retirement Plan Account
As a plan member, a premium equal to 6% of your annual compensation is paid as a Benefits for Life premium. Of that 6%, 3% goes into your Retirement Plan (RP) account. The remaining 3% is used to provide disability and death benefits, as well as an administrative fee.
All money contributed to your RP account purchases units for you. Each unit has a dollar value, which will fluctuate daily based on investment gains and losses.
How Accumulation Units Are Purchased
Assume your annual compensation is $40,000 and the unit value, which changes daily, is $100 when your monthly premium payment is received. The number of units purchased with that payment for your account would be:
- $40,000 multiplied by 3% = $1,200
- $1,200 divided by 12 = $100
- $100 divided by the $100 = 1 unit purchased
The number of units purchased each month will be based on the unit price in effect when the payment is received. As more money is contributed to your account each month, you accumulate more units. As those units grow in value through investments, so does the value of your RP account.
BGCM recommends that employers supplement Benefits for Life retirement contributions to provide more adequate retirement income. The Tax-Deferred (TDA) provides a flexible way to do so.
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