What does a qualifying factor of 90 in a pension plan typically indicate?

A qualifying factor of 90 in a pension plan typically indicates the sum of an individual's age and years of service, which must equal 90 for the individual to qualify for early retirement benefits. This factor is used by some pension plans as a guideline to determine eligibility for full retirement benefits, incentivizing employees to remain with the company longer and accumulate both service years and age.

When an individual combines their age with their years of service and reaches a total of 90, they become eligible for certain retirement benefits, which may include pension payouts or early retirement options without penalties. This system promotes longevity and commitment to the organization, aligning employee interests with the pension plan's sustainability.

Other possible options do not accurately define the concept of a qualifying factor of 90. For example, the minimum number of service years required typically refers to a distinct measure unrelated to age, while the maximum retirement age and the percentage of final salary for payout do not correlate with the qualifying factor term. These aspects of pension plans serve different functions and are based on separate criteria, emphasizing why "the sum of age and service years" is the correct interpretation of a qualifying factor of 90.