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NON-EXECUTIVE RETIREE LIFE INSURANCE BENEFITS
Certain retirees are entitled to a claim for lost life insurance coverage. We
filed a claim on behalf of those retirees who have proved that they were
entitled to life insurance as at August 20, 1999 by providing us with a copy of
their Statement of Coverage.
Employees who retired from Eaton's were provided with post-retirement life
insurance coverage that diminished over a specified period following their date
of retirement.
Before 1995, the year when Eaton's introduced the LifeStyles flexible
benefits program, retirees were provided with post-retirement life insurance
that reduced to zero coverage over a ten-year period. Data for these
individuals was kept in paper files at Eaton's. At the time of a retiree's
death, the files were reviewed to determine whether the individual had coverage
remaining. Based on the paper files, it would therefore have been extremely
difficult and time-consuming to value each employees entitlement on an
individual basis.
As at August 20, 1999, only those retirees who retired between August 20, 1990
and December 31, 1994 had life insurance coverage remaining under the pre-LifeStyles
benefit program. Assuming an initial face amount at retirement of $30,000, and
an average retirement date between August 20, 1992 and August 19, 1993, the
average amount of insurance remaining in force at August 20, 1999 would be
$9,000. This amount would reduce to zero over a three year period.
After 1994, employees were covered under the LifeStyles flexible benefit
program. Under LifeStyles, retirees were provided with $10,000, of life
insurance diminishing to zero over five years.
The cost of calculating the value of the remaining balance of life insurance on
an individual basis for eligible retiree would have exceeded the benefit
payable to the retirees. Therefore, we filed average claims calculated by an
actuary for those retirees who proved they still had remaining life insurance
as follows: $833.31 for males retired prior to 1995; $551.25 for females
retired before 1995; $520 for males retired after 1994; and $300 for females
retired after 1994.
This claim has been accepted by the Liquidator and dividend payments have been
released to eligible retirees.
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