If you joined Lockheed Martin before January 2006, you are one of the lucky employees who get to take part in the pension plan. Employees hired on/after this date will be able to participate in the 401(k) plan, but this post will focus only on the pension plan. Many people these days are more familiar with a 401(k) since pensions aren’t as common. With pensions being less available, it is important to understand some of the terminology and concepts.
From a cost perspective, Lockheed’s pension is straightforward; the company bears the entire cost. If you glance at your pay stub, you will notice there isn’t a deduction for the pension plan.
Part of the determination of pension benefits is the hours of service. An hour of service is applied to any work done on regular work days, holidays, vacation days, military leave, and paid leaves of absence. You receive credit with 190 hours of service each month that you worked at least one hour.
To receive your pension benefit, you must be vested. One year of vesting service is equal to 1,000 hours of service, as defined above. Vesting eligibility is met with one of the two requirements:
- Five years of vesting service
- Reach the age of 65 during employment with Lockheed Martin
Note that if you obtain five years of vesting service and you terminate employment prior to age 65, your benefit will receive a reduction. The earliest age at which you could still receive a pension benefit with five years of vested service is 55.
One of the determinations of pension benefits is the credited service, which is based on hours of service. For every 2,080 hours of service, you will receive one year of credit service. Be aware that credited service is no longer applied for years after 2019 (prior credit years are still valid).
For more information on pension terminology, refer to the Summary Plan Description or set up an appointment with us! Also, stay tuned for our upcoming blog post that will break down the differences between a 401(k) and a pension.
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Be sure and check back next week for more valuable Lockheed Martin information. Cheers!