Lockheed Martin Provides Employees with Security in Retirement
This article provides important information about the status of current retirement plans.
As the 2012 IAM labor negotiations continue, employees have asked questions about Lockheed Martin pension plans. Specifically, they are asking if Lockheed Martin will continue to offer a ‘defined benefit’ pension plan, or a pension that will pay a specified benefit value to an eligible retiree. We cannot talk about proposals that will be made, but here are some important FACTS about retirement savings:
Lockheed Martin is committed to continuing its pension plans for employees who already participate.
Lockheed Martin contributed $2.3 billion to its pension trust in 2011, and Lockheed Martin has typically funded its pension plans at levels higher than what is required by law.
In the next five years, nearly 64 percent of Aeronautics Fort Worth IAM represented employees will be eligible for retirement. Any pension that’s been accrued to date cannot be taken away from employees.
The competitive reality is that a ‘defined benefit’ plan for new hires is no longer the norm.
The trend for major corporations has been to move away from ‘defined benefit’ pensions for newly hired employees. The disappearance of traditional pension plans has been taking place throughout corporations nationwide for 30 years. In 1985 there were 112,000 single-employer defined benefit plans in the U.S., but nearly a quarter century later in 2009, there were only 27,650.
The number of companies that no longer offer traditional pension plans hit a record high in 2011 and most all have been replaced by 401(k) plans, according to a recent study. Less than one-third of Fortune 500’s top 100 companies offer any defined benefit plan to newly hired employees, the Towers Watson study indicates.
Lockheed Martin shifted from offering the pension to non-represented new hires in 2006.
The ‘defined benefit’ plan for new hires was replaced with the Capital Accumulation Plan (CAP) – a ‘defined contribution’ plan. Participants receive a company contribution that provides a savings plan for retirement.
CAP participants can take the accumulated retirement savings with them if they leave the company for any reason – a feature that is not available with ‘defined benefit’ plans.
Competitive benefits are important for Lockheed Martin in attracting and retaining talent to its workforce, and win and keep business. And, helping employees achieve their long-term savings goals is a major part of the Total Rewards of a Lockheed Martin career.