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Financial Planning

Lockheed Martin Pension Window: What You Need to Know

Lockheed Martin has provided employees and retirees with the option to receive a lump-sum payment. The corporation has decided to transfer its pension obligations to Athene Holdings Ltd., an insurance provider. This has sparked critical discussions and questions regarding the future of retirement security for those who have devoted their careers to the company. Athene assumes a crucial role in protecting the financial futures of Lockheed Martin employees and retirees.

Under this arrangement, Lockheed Martin professionals have the option of accepting a fixed sum payment, selecting annuity payments to fulfill their pension obligations, or continuing to defer payments. This decision-making process positions the reins of retirement planning squarely in the hands of the individuals affected by this transition. They must carefully evaluate the benefits and drawbacks of each option, taking into account their personal financial objectives, risk tolerance, and desired level of control over their retirement funds. In the midst of this transition, the decisions made by Lockheed Martin professionals will have a significant impact on their financial security during retirement, making it crucial to approach this decision with care and, ideally, with the assistance of financial experts.

This is a pivotal period for Lockheed Martin employees and retirees. On September 17, 2023, the pension transition window for Lockheed Martin employees opened. The 7th of October, 2023 is the deadline for this decision that will determine their financial futures: whether to continue with their traditional pension plan or decide for a lump-sum payout. To ensure a seamless transition to the selected payment option, payments to Lockheed Martin retirees who make their selections during the window period will begin between the first of October and the first of November 2023. If you do not make a decision before the deadline, you must be aware of the possible default option of taking an annuity. This article examines the pension situation at Lockheed Martin and the implications of their decision to transfer pension liabilities to Athene. We will examine the factors that employees and retirees must consider before the window of opportunity closes, shedding light on the options presented within this unique window of time. Join us as we navigate the complexities of retirement planning in an era of change and unpredictability, providing insights to assist you in making informed decisions regarding your financial security.

"Please note that The Retirement Group is not affiliated nor endorsed by Lockheed Martin"

Lockheed Martin has actively reshaped its approach to managing pension obligations in recent years, signifying a significant shift in the company's strategy to safeguard the financial future of its employees and retirees. Lockheed Martin's transformational voyage began in 2018 when the company transferred $800 million in pension obligations to Athene as part of its pension liability transfer. Building upon this momentum, Lockheed Martin embarked on an even more substantial voyage in 2021, offloading an impressive $4.9 billion in pension liabilities to Athene. This substantial transfer demonstrated Lockheed Martin's commitment to efficiently manage its pension obligations while maintaining a constant focus on the long-term financial security of its workforce. This operation's scope exemplified the company's commitment to adapting to the changing landscape of retirement benefits, ensuring that its stakeholders, including employees and retirees, continue to enjoy the financial security and flexibility required to navigate the complexities of contemporary retirement planning.

Lockheed Martin is once again in the throes of a strategic move; $4.3 billion in pension obligations were transferred to Athene in the present day. This latest endeavor demonstrates Lockheed Martin's unwavering dedication to securing the future financial stability of its retirees and employees, thereby solidifying its commitment to this transformative approach. These considerable transfers represent a forward-thinking corporate strategy that not only adapts to shifting financial landscapes but also bolsters Lockheed Martin's standing as an employer committed to protecting the retirement futures of those who have devoted their careers to the company.

As Lockheed Martin endures a pension transition, the choice between receiving a lump sum or opting for annuity payments represents a crucial juncture in the financial journey of the company's professionals. The advantage of choosing a fixed sum is immediate access to a substantial portion of their pension fund. Generally, your lump-sum payment will be taxed as conventional income. In addition, if you are younger than 59.5 years old, you may be subject to an early withdrawal penalty of 10%. This single sum offers the flexibility to manage investments, potentially allowing for greater financial growth and strategy customization. Choosing annuity payments, on the other hand, ensures a constant stream of income over time, providing a dependable source of financial support throughout retirement. The option to accept a lump sum has several potential advantages, particularly in an era where financial independence and individualized investment strategies are essential for retirement planning. Individuals gain control over their retirement funds with a lump sum, allowing them to tailor their investments to their specific objectives and risk tolerance. This enables them to make investment decisions that have the potential to generate higher returns than the fixed income provided by annuities. Managing these investments, which can be both an opportunity and a challenge, is a consequence. It should be noted that there has been an upward trend in interest rates. As we have observed recently, higher interest rates can result in reduced lump sum payment amounts. This correlation is a result of the fact that pension liabilities are frequently computed using current interest rates. When interest rates increase, the present value of prospective pension payments decreases, which improves the company's financial position.

Before making a decision, it is strongly advised that Lockheed Martin professionals consult with one of our qualified financial advisors due to the decision's complexity and far-reaching implications. Your individual financial objectives, risk tolerance, and retirement strategy should inform your decision. Our financial advisors can provide a comprehensive analysis of an individual's financial situation, long-term objectives, and risk tolerance, thereby aiding in the formation of well-informed decisions. Whether the objective is to increase control over investments or to ensure a steady income source, seeking professional advice is a prudent step toward securing a comfortable retirement future amidst this pension transition.

  1. https://ir.athene.com/news/news-details/2021/Athene-Announces-4.9-Billion-Pension-Risk-Transfer-Transaction-with-Lockheed-Martin/default.aspx

    “we are seeing companies place increasing emphasis on reducing pension risk in order to focus on core business”

    “This transaction with Lockheed Martin represents Athene's largest single PRT transaction to date”

    “The transaction announced today is the second pension risk transfer transaction Lockheed Martin has signed with Athene, following a transaction in 2018”

  2. https://news.lockheedmartin.com/2021-08-03-Lockheed-Martin-Reduces-Gross-Pension-Obligation-by-4-9-Billion-with-Purchase-of-Group-Annuity-Contracts

    “to transfer approximately $4.9 billion of Lockheed Martin's pension obligations and related plan assets for approximately 18,000 U.S. retirees and beneficiaries to Athene”

    “The transaction will result in no changes to the benefits received by retirees and beneficiaries”

  3. https://www.reinsurancene.ws/athene-secures-4-3bn-pension-deal-with-lockheed-martin/

    “Athene has agreed to provide annuity benefits for over 40,000 Lockheed Martin plan participants, totaling $10bn in pension obligations and related plan assets”

    “Today, many plan sponsors are looking for a trusted partner to help them reduce the volatility of their pension obligations”

    “Athene, a retirement services company, has closed its third pension group annuity (PGA) with Lockheed Martin involving the transfer of $4.3bn in pension obligations” (2022)

  4. https://www.reuters.com/business/aerospace-defense/lockheed-reduces-pension-woes-by-nearly-5-bln-forecasts-hit-profit-actuarial-2021-08-03/

    “it would cut its pension liabilities by about $4.9 billion and revised down its forecast for the full-year due to actuarial losses it expects to incur”

    Lockheed took a non-cash charge related to actuarial losses. This charge amounted to about $1.7 billion in the third quarter.

    The company now expects full-year earnings of $21.95 to $22.25 per share, down from its prior forecast of $26.70 to $27.00”

  5. https://www.prnewswire.com/news-releases/lockheed-martin-reduces-gross-pension-obligation-by-4-3-billion-with-purchase-of-group-annuity-contracts-301576004.html

    The contracts were purchased using assets from Lockheed Martin's master retirement trust and no additional funding contribution was required as part of this transaction”

  6. https://www.athene.com/binaries/content/assets/ausa-assets/press-releases/pdf/2022-06-27-Lockheed-Martin-PRT-Press-Release_Final.pdf

  7. https://www.columbiathreadneedleus.com/binaries/content/assets/cti-blog/pension-derisking-white-paper.pdf

The Retirement Group is not affiliated with nor endorsed by Lockheed Martin. We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or FSC Securities provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at www.theretirementgroup.com.

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