Page 16 - Hess Pension 2017

Key Terms
Cash Accumulation Formula
Pension Plan The cash Accumulation Formula Pension Plan is a type of de ned bene t plan called a cash balance plan. A cash balance plan de nes the pension bene t in terms of an account balance for each participant. The account is credited with a “pay credit” (such as 5 percent of compensation from his or her employer) and an “interest credit” (either a xed rate or a variable rate that is linked to an index such as the 30-year Treasury bond rate). increases and decreases in the value of the plan’s investments do not directly affect the bene t amounts promised to participants. Thus, the investment risks and rewards on plan assets are borne solely by the employer. When a participant becomes entitled to receive bene ts under a cash balance plan, the bene ts that are received are de ned in terms of an account balance. The bene ts in most cash balance plans, as in most traditional de ned bene t plans, are protected, within certain limitations, by a federal insurance program provided through the Pension Bene t Guaranty corporation (PBGc).
Compensation
compensation includes your base pay, overtime and Annual incentive Plan (AiP) award.
Disability Retirement
if you become disabled (as de ned by the Social Security Act) before your normal retirement date, you will continue receiving pay credits and interest credits until your normal retirement date based on your pay just before you became disabled. you have the option to choose an earlier disability retirement, provided you terminate employment, have at least 10 years of service, are eligible to receive a pension bene t and provide documentation showing you are eligible for and receiving a Social Security disability bene t.
Eligible Employee
Eligible employees include U.S. employees hired on or after January 1, 2017, of any Hess company that is a participating employer in the Hess corporation Employees’ Pension Plan.
collectively bargained employees are not eligible. An individual who is classi ed by a participating employer as an independent contractor or leased employee is not eligible to participate in any bene t plans sponsored by the employer.
ERISA
The Employee Retirement income Security Act of 1974 (ERiSA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.
Hess Corporation Employees’ Pension Plan The Hess corporation Employees’ Pension Plan is one de ned bene t plan with two formulas for calculating bene ts — a traditional nal average pay formula and a cash balance formula. The “Traditional Formula” applies to employees hired before January 1, 2017. The “cash Accumulation Formula” applies to employees hired on or after January 1, 2017.
Interest Credits
interest credits are determined by multiplying your closing monthly account balance by a predetermined interest rate. The cash Accumulation Formula interest rate is based on the 30-year Treasury bond rate as of the prior november and cannot be lower than an annual rate of 1 percent. For example, the annual rate for 2017 is 2.85 percent, prorated monthly.
interest credits are deposited into your cash Accumulation Account on the last day worked each month. Because interest credits are deposited monthly but based on an annual interest rate, the interest is applied on a pro rata basis. in other words, one-twelfth of the annual interest rate is multiplied by your opening account balance, and then deposited on the last day of the month. interest credits will continue to be added until the last day of the month before you begin receiving your plan bene t.
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