Boeing (BA) is shifting 68,000 nonunion employees to 401(k) plans as it attempts to curb the company’s rising pension costs. Machinist union members will keep their traditional pension plan.
“Account” means a recordkeeping account established to track a Participant’s Restoration Benefit (Deferral Contributions and Company Matching Contributions), Executive Company Contributions, and DC SERP benefits.
Calculating Your Benefits
A person’s whole financial condition should be taken into consideration while making the tricky option of how to collect their pension income. The choice can affect your ability to meet income needs in retirement.
Boeing engineers who are members of a workers’ union, the Society of Professional Engineering Employees in Aerospace (SPEEA), face a dilemma when they reach the age to retire: the company’s traditional pension plan offers only a lump sum option or a monthly check distributed over several years. By contrast, managers and nonunion staff are offered a lump sum option in the company’s separate pension plan for nonunion employees.
The Boeing pension plan provides employees various investment options, including Lifecycle Funds, Index Funds, Actively Managed Funds, and a Company Stock Fund. The Boeing pension plan also allows participants to work with retirement and financial advisors to help them maximize their benefits.
Survivor Benefits
Understanding your pension options is essential to determine how they fit into your financial plan. The information from the project does an excellent job of giving you information about your different options. Still, it’s up to you to contextualize that information with your financial situation and goals.
In addition to the single life annuity and surviving spouse option, you can elect the accelerated income option or a life annuity with a 10-year certain. If you choose one of these options, you will lose the ability to pass on any unused portion of your benefits to your heirs, and your single-life annuity will be reduced to pay for these alternatives.
If you choose the surviving spouse option, they will temporarily supplement your monthly benefit for your spouse’s lifetime. They will calculate this amount by adding your benefit credits, interest credits, Heritage benefit, and Times Mirror indexing benefit (if applicable) and converting it into a monthly annuity payment.
Lump Sum Payments
Engineers at Boeing (BA) can receive their pension in a lump sum or fixed-income monthly checks for life. Historically, about half of engineers have chosen the lump sum option. They can invest it themselves, which allows them to beat inflation but also takes on market risk, or they can take the fixed lifetime payments and know what their monthly checks will be every year for the rest of their lives.
The choice depends on a wide variety of personal factors. For example, if an engineer plans to retire early, higher interest rates could reduce the amount of their pension payout.
Nonunion employees, not machinist union members, will still be eligible for the lump-sum payment in the separate management/nonunion pension plan. Still, the company says it has begun moving those workers into 401(k) plans to curb growth in its unsustainable pension liabilities. Those workers can also work with retirement and financial advisors to help them save and invest for their futures.
