The Impact Of Boeing’s Pension Plan On Retirees: What You Need To Know

Boeing's Pension Plan On Retirees

Engineers in Boeing’s leading workers’ union, the Society of Professional Engineering Employees in Aerospace (SPEEA), have two choices for receiving their pension payout: a lump sum or regular payments. Many engineers choose the lump sum. When employees choose annuity payments, they can also decide whether those payments will cover only their lifetime or if they want them to continue for their spouse’s life.

What You Need To Know

The Boeing Company offers its employees several retirement and savings programs. The best way to plan for your future is to invest a portion of your salary toward retirement and make the most of your employer match in the 401(k) program. Pensions are just one element of a retiree’s overall retirement income, including Social Security, employer-matched 401(k) savings plans, and personal investments. A well-conceived financial strategy can help you manage your retirement cash flow, determine your acceptable level of risk, and grow your retirement assets. As you approach retirement, you will face pivotal decisions, including when and how to receive your Boeing pension benefits. Making an informed decision requires knowing your options and considering rising interest rates, which can be obtained from a qualified financial advisor.

Taking A Lump Sum Payment

A lump sum option allows you to receive your entire pension balance at retirement in a single, one-time payment. When you select this option, you must pay taxes on the lump sum amount (your employer is obligated to withhold 20 percent). When the lump sum is rolled into a qualified retirement account within 60 days of being received, you can avoid paying the 10% early withdrawal penalty. However, the value of a lump sum will decrease over time as interest rates increase. In addition, life expectancy will also affect the lump sum’s value. If you’ll live longer than average, lifetime payments make more sense. A financial adviser can help you determine the best option for you based on your circumstances. They’ll help you understand the actuarial calculations used to calculate the lump sum and lifetime payments and your tax situation. They’ll also recommend annuity providers and help you select options that meet your needs.

Choosing An Annuity

Choosing an annuity leaves the money in Boeing’s hands, and they are responsible for making the promised payments. However, they will take a cut of your investment return, and you could end up with less than if you took the lump sum. Calculating what lump sum is equivalent in actuarial terms to lifetime monthly checks varies based on interest rates. Rates are currently at a historical low and have been for some time. When they rise, the lump sum would drop in value. If you choose to take a lump sum, you must decide if you want to invest the proceeds in your retirement account or use them as income in retirement. This decision will be based on your unique financial situation, goals, and risk tolerance. Experts can help you run side-by-side retirement planning scenarios comparing the lump sum option with a regular pension check. They can also discuss other income sources, like systematic withdrawal plans and IRA rollovers.

Health Care Costs

Suppose you’re a Society of Professional Engineering Employees in Aerospace union member. In that case, you can take your pension as either a lump sum or a fixed monthly check for life. Typically, about half of SPEEA engineers choose the lump sum. Boeing argues that during the negotiation of the current CBA, it made no explicit agreement to keep its promise of medical coverage in place for retirees and that it is well within its rights to change that coverage. Boeing also points out that it had no problem changing the health benefits of active employees and that in the past, its changes to the retiree plan were tracked in the same insurance booklets and SPDs that described the plans for active workers. The UAW and the plaintiffs disagree, arguing that Boeing violated ERISA by unilaterally imposing deductibles, copayments, and prescription-drug copayments on its retirees and that the company did so without first obtaining the consent of those retirees. The case is still pending in federal court.

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