Common questions about the Lockheed Martin Retirement Plan Change

In 2014, Lockheed Martin announced they will make changes to the company’s retirement benefits package. If you were affected, you probably know it by now, as the changes started taking affect in 2016 and will be complete in 2020.

Below I thought I’d run down some of the biggest questions clients have about the Lockheed Martin retirement plan changes.

Am I affected by the pension plan change? 

If you are a salaried, U.S.-based employee in the Lockheed Martin Salaried Employees Retirement Program (Pension Plan) as well as the Capital Accumulation Program (CAP) you are affected. If you are already retired from Lockheed, nothing will change for you as your retirement benefits have already been calculated.

Employees hired after 2006 when the company stopped enrolling employees in the pension plan, you won’t be affected.

Not sure? You can contact the Lockheed Martin Employee Service Center toll-free at 866-562-2363.

What changed? 

Basically, Lockheed Martin decided to discontinue offering the pension plan benefit to new employees. A pension gives you (and possibly your heirs) a monthly retirement check after you retire. The amount of your check depends on a number of factors including years of service, salary when you leave the company, your age when you retire and the type of payments you select.

In January of 2016, the company froze the salary component of that calculation for all employees going forward. Instead, the company started contributing a percentage of your salary to the Lockheed Martin Retirement Savings Program.

In January of 2020 the company will freeze the years of service component as well in the calculation.

How has your “mailbox money” been affected by the LM retirement changes?

Why did Lockheed make the change? 

Lockheed made the change for a couple of reasons, one of which being changing government regulations. Without any changes, Lockheed would have been hit with tax penalties if they didn’t freeze the pension by 2020.

After 2006, new Lockheed employees were not enrolled in the pension plan. As the company continued to grow, a larger percentage of employees are not covered by a company pension. If Lockheed didn’t make a change, the penalties would have been costly for the company the the employees.

The other reason being Lockheed, like many large companies over the past 10+ years, have begun to shift the retirement risk to the employees. By getting rid of the pension option and contributing more to the 401k benefit, the investment risk is with the employee.

It is even more important for employees to spend time making sure their retirement funds are allocated correctly. Read more HERE.

For more information on the Lockheed Martin retirement plan change, you can visit www.lockheedmartin.com/retirement or contact the Savings Plan Information Line at 800-444-4015.

Need help to figure out if your retirement picture is being affected by the changes? Shoot me an email at Brian@theaeroadvisor.com or fill out the quick and easy form below and I’ll contact you.