A lot of my Boeing customers have been asking me about their benefits recently. While I'm not a financial advisor, I do like to have answers to my client's questions. So I did a deep dive and here is what I found.
Boeing Mergers & Acquisitions make this a very complicated plan. On top of the plans complexity, Boeing's main pension plan (PVP), was frozen at the end of 2015. We will go into detail about what this means for your benefit later on. Lets review.
Non-Heritage vs Heritage Plans
If your company merged with or was acquired by Boeing, your plan may have merged with the Boeing PVP plan. This is different from your plan being transferred into the Boeing PVP plan, which is what happens with Heritage plans. The plans below are not Heritage plans:
Oak Ridge Plan - Effective Dec 1, 2011
Corinth Plan - Effective Dec 1, 2011
Boeing Information Services - Effective Dec 1, 2011
BAO Florida Plan - Effective Dec 1, 2011
Employee Retirement Income Plan of McDonnell Douglas Salaried Plan (MDC) - Effective Dec 31, 2007
Times Mirror Pension Plan - Effective October 5, 2000
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Plans that directly transfer into the Boeing PVP plan are referred to as Heritage plans. Heritage plans include those listed below:
Boeing North American Retirement Plan
Aerospace Salaried Plan - Effective Oct 1, 2000
Certain Salaried Plan - Effective Oct 1, 2000
Electronics Salaried Plan - Effective Oct 1, 2000
Collins International Plan - Effective Oct 1, 2000
El Paso Hourly Plan - Effective Oct 1, 2000
BSS Retirement Plan - Effective April 1, 2003
McDonnell Douglas Salaried Plan - Effective Jan 1, 1999
If you were part of the SCPEA union you may receive separate benefits from the union plan as well.
Boeing Company Employee Retirement Plan - Effective Jan 1, 1999
This is not a catch-all for all Boeing employees, and even within these plans there are certain exceptions.
Special rules apply to you if you were in one of the following groups:
If you were an employee of Jeppesen or Airspace Safety Analysis Corporation ("ASAC") and you were a participant in the Times Mirror Pension Plan on October 4, 2000, your participation in the PVP began on October 5, 2000. If you were not yet a participant of the Times Mirror Pension Plan, your participation in this PVP began on the later of (i) the first anniversary of your hire date with Jeppesen or ASAC and (ii) October 5, 2000. Your accrued benefit, if any, under the Times Mirror Pension Plan (Times Mirror accrued benefit) remains in that plan. It is not considered a Heritage Benefit, but is subject to special indexing rules.
If you have service in the Employee Retirement Income Plan-Hourly East or the Employee Retirement Income Plan-Hourly West that was transferred to the MDC Salaried Plan, which in turn was merged into the PVP, your benefit, if any, remains governed by the respective hourly plan and is not considered a Heritage Benefit.
Eligibility: Generally you are eligible for PVP if you are age 55 or older and have at least 10 years vesting experience and you were hired (or rehired) before January 1, 2009. You must also be a nonunion employee and paid through the Company Payroll Department or an adopting affiliate/subsidiary.
Generally, you are ineligible if you fall under one of there exceptions:
Eligibility: Generally you are eligible for PVP if you are age 55 or older and have at least 10 years vesting experience and you were hired (or rehired) before January 1, 2009. You must also be a nonunion employee and paid through the Company Payroll Department or an adopting affiliate/subsidiary.
Generally, you are ineligible if you fall under one of there exceptions:
You’re represented by a collective bargaining agent.
You were hired (or rehired) after January 1, 2009.
You were a non-resident alien working for the company, and had no earned income for work performed in the U.S.
You were working in a capacity that the Plan Administrator deemed to be contract labor or independent contracting.
You were a non-represented employee on a temporary management assignment.
You were a part-time mesa firefighter.
You were accruing a benefit under any other qualified defined benefit pension plan maintained by a member of the Boeing Controlled Group, United Space Alliance, LLC (USA) or United Launch Alliance during the same period of time.
You were an employee of an affiliate or subsidiary of Boeing that had not adopted the PVP.
PVP Benefits:
Your PVP value is the total of your Benefit Credits and Interest Credits. Once you begin receiving your pension, the PVP converts your total credits to a monthly amount, which is payable for the rest of your life.
The amount of your PVP benefit will depend on all of the following:
Your age and years of service with the Company
When you begin receiving your pension
Whether you leave the Boeing Controlled Group before retirement age
The growth of your base pay rate
As of December 31, 2015, the PVP was frozen. While you will still receive a pension benefit, if you are eligible, you will no longer accrue Benefit Service, Benefit Credits, or Indexing Benefits. You will, however, continue to accrue Interest Credits.
The PVP compares two alternate formulas to determine your pension benefit:
1. Credit-Based + Heritage:
The Credit-Based Benefit formula is based on your Pensionable Pay and your age at the end of each calendar year (until December 31, 2015). It also includes annual Interest Credits, generally until you start your benefit. Your Heritage Benefit or Times Mirror Indexing Benefit, if any, will be added to this benefit. Refer to your SPD for what constitutes Pensionable Pay.
Formula: Benefit Credits through December 31, 2015 + Interest Credits (converted to a monthly Annuity) + Heritage Benefit (or Times Mirror Indexing Benefit) through December 31, 2015, if any (reduced for Early Retirement, when applicable).
2. Minimum Benefit:
The Minimum Benefit Formula is based on your years of Benefit Service under the PVP and under any prior retirement plan that was transferred to the PVP.
Formula: If you terminate on or after December 31, 2015, $95*/month x years of Benefit Service through December 31, 2015 (reduced for Early Retirement if commencing before age 65)
* If you are represented by the SPEEA Professional or Technical units as of December 31, 2015, you will receive the previously approved $91 rate.
When you elect to start your benefit, it will be calculated using both formulas. You will automatically receive benefits under the formula that produces the larger monthly benefit.
Interest Credits:
The interest percentage is based on the 30-year U.S. Treasury bond yield. Annual Interest Credit percentages are based on the bond yield rate for the month of November of the prior year, within limits established by the company. Prior to December 31, 2015, the limits were a minimum of 5.25 percent to a maximum of 10 percent. Beginning January 1, 2016, the minimum limit is 5 percent.
Let's look at an example of how to use the Credit-Based Benefit formula:
**Your Heritage Benefit, if any, primarily is based on what you had earned until the date when your benefit was transferred to the PVP. Certain Heritage Benefits continued to grow along with any base pay increases. This is called indexing. For example, if your pay increased 40 percent during this time, your Heritage Benefit increased 40 percent. Indexing on certain Heritage Benefits continued until the earlier of the date you terminated unemployment, the end of the calendar year in which you turned 72, or December 31, 2015.
Retirement Age:
Normal retirement age is 65. Your normal retirement date is the first day of the month on or after your 65th birthday. You will start receiving your benefit on your normal retirement date unless you are still working for the Boeing Controlled Group.
**You may be able to start receiving your benefit before or after your normal retirement date, depending on your age, years of service and when you leave the Boeing Controlled Group.
Early Retirement-Ages 50 to 65:
You may start receiving your benefit before age 65 if you are any of the following:
Age 55 or older when your employment ends (or during the 6 year layoff period), with at least 10 years of Vesting Service.
Age 62 or older when your employment ends (or during the 6 year layoff period), with at least 1 year of Vesting Service.
Age 50 or older when your employment ends (or during the 6 year layoff period), with at least 30 years of Accumulated Benefit Service if you have a Heritage MDC Benefit.
Late Retirement - After Age 65:
The PVP provides for a late retirement benefit if you continue to work after age 65. You will earn Interest Credits on the value of your Credit-Based Benefit under the PVP until the end of the year in which you actually retire (or the year in which you turn age 72, if earlier).
Retirement From Layoff Status
If you become eligible to begin your pension benefits during the six-year period following your layoff, your pension will be calculated as if you met the conditions under Normal Retirement, Late Retirement or Early Retirement detailed above. Once you reach age 65, you must begin to receive your Normal Retirement benefit payments. If you do not become eligible for retirement during this period but are vested, you will become a Vested Terminated Participant.
If you are a Vested Terminated Participant you will be eligible to receive a benefit as soon as you reach age 55. You may defer receiving benefits until age 65. Your monthly benefit will be reduced if you choose to receive a payment before age 65. The reduction amount will be based on your age when you begin receiving payments and not on your age when you left the company.
Benefit Payment Options:
The payment methods available under the PVP include:
A single life annuity
A 50, 75, or 100 percent surviving spouse option, if you are married
A 50, 75, or 100 percent domestic partner option, if you have a Designated Domestic Partner. **The domestic partner option will not be available for you to elect if you have a Benefit Commencement Date on or after January 1, 2017.
A life annuity with a 10-year certain option
An accelerated income option
If a Pension is offered, Boeing's retirement plan will generally allow for different forms of payment.
Single Life Annuity
The monthly Single Life Annuity is the benefit from which all of the optional forms of payment under the plan are derived
Pays a fixed amount each month for retiree’s lifetime
A death benefit may be payable to your beneficiary
A death benefit is payable if vested and employee dies before employment ends or start of receiving benefits
Lump-Sum Option (Very limited cases)
Lump-sum payment is actuarially equivalent to the total annuity you would have received as a Single Life Annuity during your lifetime
Calculated using actuarial factors based on your age and the interest rate in effect on your annuity starting date
No death benefits are payable
Life & Term-Certain Annuity Option
Smaller than the Single Life Annuity
5, 10, or 15 year period certain
If you have multiple beneficiaries or if your beneficiary is your estate or trust, remaining payments converted actuarially to a lump-sum
No death benefits are payable
Joint & Survivor Annuity
Upon your death, a percentage of your monthly benefit is paid to your joint annuitant for his or her lifetime
Reduction factors may apply depending on your company's policy
Uniform Income
Receive same level of income before and after receiving Social Security benefits
The level of income may change at a certain age. For example in the Boeing Uniform Income policy:
Before age 62, employees receive a larger monthly annuity from the plan
After age 62, when Social Security benefit is available, employees receive a smaller monthly annuity from the plan
Each company has varying rules in regards to Uniform Income, review your company's SPD or talk to an advisor to find out the rules for your specific plan.
Want to learn about the different stages of retirement? Visit: https://techstaffer.blog/2019/11/14/boeing-stages-of-retirement/
If you’d like to read about survivor benefits, visit: https://techstaffer.blog/2019/11/28/survivor-checklist-how-your-spouse-can-receive-boeing-benefits-after-your-death/
Wondering if you should work in retirement? Visit: https://techstaffer.blog/2019/12/05/life-after-boeing-should-i-work-in-retirement/
Sources:
The Retirement Group or www.theretirementgroup.com
“Retirement Plans-Benefits & Savings.” U.S. Department of Labor, 2019, www.dol.gov/general/topic/retirement.
“Generating Income That Will Last throughout Retirement.” Fidelity, 22 Jan. 2019, www.fidelity.com/viewpoints/retirement/income-that-can-last-lifetime.
BA Summary Plan Description, 2017
