Here is a glossary of some terms you may see used throughout the retirement process.
Actuarial Equivalent – A comparison of the present value of one series of payments to another, taking into account specific mortality and interest assumptions, such as benefit options that are considered to provide the same overall value to the participant.
Annuity – Periodic payments made to a retired participant or another payee, payable under the provisions of the group annuity contract.
Annuity Commencement Date – The effective date for the first retirement benefit payment. Also known as retirement benefit commencement date or benefit commencement date.
Association – A subgroup of participants under a group annuity contract.top
Beneficiary – A person named by the participant to receive any benefits due upon the participant’s death.
Benefit Commencement Date – The effective date for the first retirement benefit payment. Also known as annuity commencement date or retirement benefit commencement date.
Benefit Option – A form of retirement benefit defined by the group annuity contract that a participant is eligible to receive. Examples
include lifetime only payments or a continuation of a certain percentage of the benefit to a spouse or contingent annuitant due after the
Benefit Payment – Retirement benefit amount payable to a participant as defined by the group annuity contract.
Benefit Quote – An estimation of benefits to be provided to a participant that outlines the benefit options available to that individual under the terms of the group annuity contract. Also known as a quote.top
Cash Out – The election of a single, lump sum payment in lieu of a recurring monthly benefit, if allowed, under the group annuity contract.
Certain & Continuous Option – Provides retirement benefit payments for the lifetime of the participant. If the participant dies before the designated period of time, payments will continue for the remainder of that period to the designated beneficiary. For example, if a 5 year certain & continuous option is selected, and the participant dies after receiving payments for 3 years and 11 months, the remaining 1 year and 1 month of payments will be paid to the beneficiary. If the participant dies after receiving 5 years of payments, nothing further will be due to the beneficiary.
Contingent Annuitant – The individual designated by the participant to have retirement benefits continue to be paid to upon death. This individual's life expectancy is used in the calculation of the participant’s benefit amount.
Contingent Annuitant Option – Provides lifetime annuity payments to the participant, and then continues a defined percentage of the payments to the contingent annuitant, if still living, upon the participant’s death. For example, if a participant receiving a benefit of $100 per month elected a 75% contingent annuitant option, his or her contingent annuitant will receive $75 per month for the remainder of their life upon the death of the participant. Defined percentage of payments or contingent annuitant options typically include 100%, 75%, 66 2/3%
Contract Holder – The entity or employer to which a group annuity contract is issued by John Hancock. This is usually the trust for the pension plan or the corporation, union or government entity sponsoring the benefit plan.
Cost of Living Adjustment (COLA) – An annual increase of a retirement benefit payment if provided for by the group annuity contract. For example, a $100 monthly retirement benefit with a 3% COLA would subsequently pay $103 per month after the first year, $106.09 per month after the second year, and so forth.
Customer Number – A unique identification number assigned by John Hancock to identify the participant or payee.top
Defined Benefit Plan – A retirement plan offered by an employer that provides for the payment of retirement benefits to eligible employees.
Deferred Participant – A participant under a group annuity contract who has not started receiving retirement benefit payments.top
Early Optional Retirement (EOR) – A provision under a group annuity contract allowing participants to retire at an age earlier than the normal retirement date, usually with a reduced benefit payment amount.
Earliest Retirement Date or Age – Earliest date or age at which a participant may retire, usually with a reduced retirement benefit payment amount. For example, some group annuity contracts may offer a reduced benefit for eligible participants at age 55. This is an additional option, in lieu of the full retirement benefit, which is typically offered at age 65.
Electronic Funds Transfer (EFT) – Distribution of a retirement benefit payment sent electronically to a financial institution account. Participants have the option to receive payments via EFT or a mailed paper check.
Employee Accumulations – The sum of employee contributions plus interest credited at a rate defined in the group annuity contract.
Employee Contributions – Funds contributed toward the retirement benefit by the participant.
Employee Retirement Income Security Act (ERISA) – Legislation enacted in 1974, which changed the private employee benefits system. Among other things, ERISA established reporting and fiduciary requirements, rules for participation, vesting and funding, guarantees for certain pension benefits, and the Pension Benefit Guaranty Corporation (PBGC) to oversee plan terminations.
Exclusion Ratio – Percentage used to determine the taxable and non-taxable portions of each retirement benefit payment.top
Full Cash Refund – Provides lifetime payments to the participant, with a provision for a death benefit, payable to the designated beneficiaries. The amount of the death benefit will be equal to the excess, if any, of the amount defined in the group annuity contract less all benefit payments made to the participant.top
Group Annuity Contract (GAC) – A contract that has been purchased by an employer, known as a contract holder, from John Hancock to fund tax-qualified retirement benefits for a specified group of employees, who are referred to as participants. The group annuity contract defines the benefit payment options and amounts that the contract holder has purchased for each participant.top
Internal Revenue Service (IRS) – The agency of the U.S. Government charged with the enforcement of the Internal Revenue Code.top
Joint & Survivor Annuity (J&S) – Provides lifetime annuity payments to the participant and a survivor, usually a spouse. Upon the death of the participant, payments will continue to the surviving person based on the election made by the participant at retirement. Amounts are selected as a percentage of the participant’s benefit amount, such as 100%, 75%, 66 2/3% or 50%. Upon the death of the survivor, no further benefits are due.top
Late Optional Retirement (LOR) – A provision under a group annuity contract allowing the participant to retire at an age later than the normal retirement date, sometimes with an actuarially increased benefit amount.
Latest Benefit Start Date – Latest date or age that benefit payments may start for a participant, taking into consideration the terms of the group annuity contract and the applicable required minimum distribution (RMD) date limits under federal tax law.
Lump Sum Distribution – The payment of a participant’s benefit as a one time, single sum payment.
Lump Sum Equivalent – A lump sum amount that represents the current value of periodic payment amounts due to the participant in
Normal Form of Annuity – The default form of retirement benefit that is payable if the participant does not choose another form of benefit. Although specific to each group annuity contract, it is usually a life benefit with no death benefit for an unmarried participant and a 50% joint and survivor annuity for a married participant.
Normal Retirement Age or Normal Retirement Date – The age or date at which a participant is eligible to retire and receive their full benefit payment amount. For most group annuity contracts this is the first of the month after the participant turns age 65.
Normal Retirement Benefit – The benefit purchased for a participant by the contract holder as of the normal retirement age.top
Participant – The person listed as being entitled to a retirement benefit under a group annuity contract.
Period Certain – Provides for the payment of retirement benefits to the participant for a specific time period, such as 5, 10 or 15 years. If the participant dies before the period ends, the payments will continue to be paid to the designated beneficiary for the remainder of the period. Payments to the participant or beneficiary will stop at the end of the designated period.
Periodic Payments – These are ongoing retirement benefit payments that are usually issued to participants on the first of every month and continue for one’s lifetime or until the designated time period ends.
Payee – Person to whom the retirement benefits are being paid. Usually this is the participant, who was employed by the contract holder. Upon the participant’s death, this may become the spouse, beneficiary or contingent annuitant.
Power of Attorney (POA) – Authority granted to an individual to act on behalf of a participant or payee as designated in a legal document that provides written consent and meets other qualifications.top
Qualified Domestic Relations Order (QDRO) – Generally, a court order that creates or recognizes the existence of an alternate payee’s right to all or a portion of a participant’s qualified retirement benefit. QDROs are usually issued in connection with divorce or custody proceedings and comply with certain requirements under the Internal Revenue Code.
Quote – An estimation of benefits provided to a participant that outlines the benefit options available to that individual under the terms of the group annuity contract.top
Required Minimum Distribution – The amount a participant must begin receiving as a retirement benefit usually no later than April 1 of the year following the year he or she turns age 70 1/2, and before December 31 for each subsequent year.
Retirement Benefit Checklist – A document provided by John Hancock that gathers personal and employment information necessary to provide a participant with a retirement benefit quote.
Retirement Benefit Commencement Date – The effective date for the first retirement benefit payment. Also known as annuity benefit commencement date or benefit commencement date.
Rollover or Tax-Free Rollover – The transfer of assets from a tax-qualified retirement plan to an individual retirement plan or to another tax-qualified plan, without incurring any tax liability. The amount, frequency, and timing of tax-free rollovers are restricted under tax law.top
Schedule of Participants – A list of covered participants under a group annuity contract.
Single Life Annuity – Provides lifetime benefit payments to the participant with no payments due to anyone after death.
Social Security Level Income Option – Takes future estimated Social Security benefits into account when calculating periodic annuity payments, so participants receive consistent payment amounts before and after collecting Social Security benefits.
Summary of Retirement Benefits Statement – A document provided to a participant by John Hancock that defines the retirement benefit options and amounts the participant is eligible to receive under the group annuity contract.top
Temporary Annuity – An annuity payable during the participant’s lifetime, but that does not continue beyond a specified period or after the participant’s death, whichever is earlier.top