Lockheed Martin Pension Plan

Two-tier final-average-pay formula tied to Social Security Covered Compensation (SSCC). For Final Average Pay (FAP) at or below SSCC: 1.25% x FAP x Credited Years of Service. For FAP above SSCC: [1.25% x SSCC + 1.50% x (FAP minus SSCC)] x Credited Years of Service. FAP equals the highest three calendar years of compensation within the last ten-year period ending no later than December 31, 2015 (when the pay component froze). Credited Years of Service are capped at December 31, 2019 (when the service component froze). Monthly benefit equals the annual benefit divided by 12, subject to early retirement reduction factors if retirement occurs before age 60.

This is general educational information about how the plan's formula works, not a calculation of your individual benefit. Your actual benefit depends on your service, pay history, and the plan terms in effect during your employment.

The salaried plan was closed to new participants effective January 1, 2006. A two-phase hard freeze followed: (1) the pay-based benefit component froze January 1, 2016, locking benefits at 2015 compensation levels; and (2) the service-based component froze January 1, 2020, capping credited service at December 31, 2019. The plan has been fully hard-frozen to all new accruals since January 1, 2020. No participant earns any additional pension benefit for service after that date. Vesting service continues to accrue for participants who had not yet reached five years as of the freeze date, and early retirement eligibility factors (age 55 with 5 years vesting service) were not altered by the freeze.

A frozen pension does not disappear. Benefits already earned are generally protected and continue to be paid under the plan's terms. A freeze changes whether new benefits accrue going forward, not whether existing benefits are honored.

Lockheed Martin has executed a series of pension risk transfers (PRTs) to Athene Holding Ltd.: (1) December 2018, approximately $800 million covering approximately 9,000 retirees and beneficiaries (Athene's first LMT transaction, structured as a buy-in); (2) August 2021 announcement, effective January 1, 2022, $4.9 billion covering approximately 18,000 retirees and beneficiaries of the Lockheed Martin Corporation Salaried Employee Retirement Program and the Lockheed Martin Aerospace Hourly Pension Plan; (3) June 2022 announcement, effective January 1, 2023, $4.3 billion covering approximately 13,600 retirees and beneficiaries of those same two plans. A further approximately $943 million PRT was announced in January 2026. All transactions covered only participants currently receiving benefits (retirees and beneficiaries); annuity obligations are held by Athene Annuity and Life Company and/or Athene Annuity & Life Assurance Company of New York.

In a pension risk transfer (PRT), an employer transfers some or all of its pension obligations to an insurance company through a group annuity contract. If your benefit was transferred, your monthly payment generally stays the same, but the company paying it changes, and PBGC insurance is replaced by state insurance guaranty association coverage. For this plan, the counterparty was Athene Holding Ltd. (2022).

When did Lockheed Martin freeze its salaried pension plan, and what exactly was frozen?

The salaried plan was closed to new participants in 2006. A two-phase freeze was then implemented: effective January 1, 2016, benefits were calculated using 2015 compensation levels (the pay component froze, so future salary increases no longer increase your pension); and effective January 1, 2020, no additional credited years of service were added (the service component froze). Since January 1, 2020, the plan is fully hard-frozen, so no participant earns any additional pension benefit for work performed after that date. Accrued benefits earned through the freeze dates are protected.

My Lockheed Martin pension was transferred to Athene. What does that mean for my monthly check?

Lockheed Martin purchased group annuity contracts from Athene Holding in 2018, 2021, and 2022, transferring the obligation to pay pension benefits to Athene. Your monthly benefit amount and payment schedule remain exactly the same; only the payer changes. Athene Annuity and Life Company (or its New York affiliate) now issues your monthly payments in place of Lockheed Martin. Your benefit is backed by state insurance guaranty associations within applicable limits, and you should have received a written notice at the time of the transfer.

Is there a lump-sum payment option for the Lockheed Martin salaried pension?

The plan does not offer a standing general lump-sum election for most participants. Under ERISA rules, Lockheed Martin automatically cashes out benefits with a present value of $7,000 or less at termination. For larger benefits, the default form of payment is a monthly annuity, either a single-life annuity for unmarried participants or a 50% joint-and-survivor annuity for married participants. Lockheed Martin has periodically offered voluntary lump-sum windows to eligible deferred-vested and retired participants; those windows are not guaranteed to recur.

Is my Lockheed Martin pension protected by the PBGC?

Most single-employer defined benefit pensions are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal agency. If a covered plan terminates without enough money to pay promised benefits, the PBGC pays benefits up to a legal maximum that varies by age. Benefits that have been transferred to an insurance company through a pension risk transfer are no longer PBGC insured and are instead backed by state guaranty associations.

Should I take my Lockheed Martin pension as a lump sum or an annuity?

There is no single right answer. The decision depends on your health and life expectancy, your other retirement assets, whether you need to provide for a survivor, and the interest rate environment that sets the lump sum value. Our lump sum versus annuity guide walks through the trade-offs in detail.