New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Is the U.S. Economy Facing a Recession? Insights for Howmet Aerospace Employees and Retirees

Healthcare Provider Update: Healthcare Provider for Howmet Aerospace Howmet Aerospace employees typically access healthcare services through a variety of insurance plans facilitated by their employer. Currently, major providers for companies like Howmet may include plans from national insurers such as UnitedHealthcare, Anthem (Elevance Health), and Cigna, although specific details may vary based on location and plan offerings. Potential Healthcare Cost Increases in 2026 As we approach 2026, Howmet Aerospace employees, like many others across the nation, face significant concerns about rising healthcare costs. Health insurance premiums, particularly for Affordable Care Act (ACA) marketplace plans, are projected to surge, with some states expecting hikes exceeding 60%. This rise is attributed to higher medical costs, the expiration of enhanced federal premium subsidies, and aggressive rate increases from insurers, potentially leading to out-of-pocket premium costs that could soar by 75% for many policyholders. For Howmet employees, these changes could mean a drastic adjustment in their healthcare budgeting as they navigate an increasingly challenging insurance landscape. Click here to learn more

In an early July poll, 58% of Americans said they thought the U.S. economy was in a recession, up from 53% in June and 48% in May. ¹ Yet many economic indicators, notably employment, remain strong. The current situation is unusual, and there is little consensus among economists as to whether a recession has begun or may be coming soon. ² As a Howmet Aerospace employee, it is imperative to keep track of current events that may affect your workplace.

Considering the high level of public concern, it may be helpful for Howmet Aerospace employees and retirees to look at how a recession is officially determined and some current indicators that suggest strength or weakness in the U.S. economy.

Business Cycle Dating
U.S. recessions and expansions are officially measured and declared by the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), a private nonpartisan organization that began dating business cycles in 1929. The committee, which was formed in 1978, includes eight economists who specialize in macroeconomic and business cycle research. ³ As a Howmet Aerospace employee looking to allocate assets into the market, understanding the metrics for recessions and expansions is of utmost importance.

The NBER defines a recession as 'a significant decline in economic activity that is spread across the economy and lasts more than a few months.' The committee looks at the big picture and makes exceptions as appropriate. For example, the economic decline of March and April 2020 was so extreme that it was declared a recession even though it lasted only two months. ⁴

As a Howmet Aerospace employee, it is important to understand that to determine peaks and troughs of economic activity, the committee studies a range of monthly economic data, with special emphasis on six indicators: personal income, consumer spending, wholesale-retail sales, industrial production, and two measures of employment. Because official data is typically reported with a delay of a month or two — and patterns may be clear only in hindsight — it generally takes some time before the committee can identify a peak or trough. Some short recessions (including the 2020 downturn) were over by the time they were officially announced.5 This information is useful for Howmet Aerospace employees making investment decisions as it enlightens the concept of market timing and break down how information is circulated.

Strong Employment
As a Howmet Aerospace employee, you may have noticed how over the last few months economic data has been mixed. Consumer spending declined in May when adjusted for inflation, but bounced back in June. ⁶ Retail sales were strong in June, but manufacturing output dropped for a second month. ⁷ The strongest and most consistent data has been employment. The economy added 372,000 jobs in June, the third consecutive month of gains in that range. Total nonfarm employment is now just 0.3% below the pre-pandemic level, and private-sector employment is actually higher (offset by losses in government employment). ⁸

The unemployment rate has been 3.6% for four straight months, essentially the same as before the pandemic (3.5%), which was the lowest rate since 1969. ⁹ Initial unemployment claims ticked up slightly in mid-July but remained near historic lows. ¹⁰ In the 12 recessions since World War II, the unemployment rate has always risen, with a median increase of 3.5 percentage points. ¹¹ As a Fortune 500 employee, it is imperative to take advantage of this distinguishing metric and re-evaluate your outlook on the market and the economy.

Negative GDP Growth
As a Howmet Aerospace employee, it is important to know the common definition of a recession (a decrease in real gross domestic product (GDP) for two consecutive quarters), and how the current situation meets that criterion. Real (inflation-adjusted) GDP dropped at an annual rate of 1.6% in the first quarter of 2022 and by 0.9% in the second quarter. ¹² Because GDP is reported on a quarterly basis, the NBER committee cannot use it to measure monthly economic activity, but the committee does look at it for defining recessions more broadly. Understanding how a recession is defined is certainly beneficial for those in Howmet Aerospace companies as it allows for educated moves in the market during times where most retail investors are considerably more uncertain.

Since 1948, the U.S. economy has never experienced two consecutive quarters of negative GDP growth without a recession being declared. Despite that, as a Howmet Aerospace employee it is important to consider how the current situation could be an exception, due to the strong employment market and some anomalies in the GDP data. ¹³

Negative first-quarter GDP was largely due to a record U.S. trade deficit, as businesses and consumers bought more imported goods to satisfy demand. This was a sign of economic strength rather than weakness. Consumer spending and business investment — the two most important components of GDP — both increased for the quarter. ¹⁴

With that under consideration, those employed in Howmet Aerospace companies should consider how the Initial second-quarter GDP data showed a strong positive trade balance but slower growth in consumer spending, with an increase in spending on services and a decrease in spending on goods. The biggest negative factors were a slowdown in residential construction and a substantial cutback in growth of business inventories. ¹⁵ Although inventory reductions can precede a recession, it's too early to tell whether they signal trouble or are simply a return to more appropriate levels. ¹⁶ Economists may not know whether the economy is contracting until there is additional monthly data.

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The Inflation Factor
With employment at such high levels, it may be questionable to characterize the current economic situation as a recession. However, it's important for Howmet Aerospace employees to keep in consideration that the employment market could change, and recessions can be driven by fear as well as by fundamental economic weakness.

The fear factor is inflation, which ran at an annual rate of 9.1% in June, the highest since 1981. ¹⁷ Howmet Aerospace employees may notice how wages have increased, but not enough to make up for the erosion of spending power, making many consumers more cautious despite the strong job market. ¹⁸ If consumer spending slows significantly, a recession is certainly possible, even if it is not already underway.

Inflation has forced the Federal Reserve to raise interest rates aggressively, with a 0.50% increase in the benchmark federal funds rate in May, followed by 0.75% increases in June and July. ¹⁹ It takes time for the effect of higher rates to filter through the economy, and it remains to be seen whether there will be a 'soft landing' or a more jarring stop that throws the economy into a recession.

No one has a crystal ball, and economists' projections range widely, from a remote chance of a recession to an imminent downturn with a moderate recession in 2023. ²⁰ If that turns out to be the case, or if a recession arrives sooner, it's important for Howmet Aerospace employees and retirees to remember that recessions are generally short-lived, lasting an average of just 10 months since World War II. By contrast, economic expansions have lasted 64 months. ²¹ To put it simply: The good times typically last longer than the bad.

Projections are based on current conditions, are subject to change, and may not come to pass.

1) Investor's Business Daily, July 12, 2022
2) The Wall Street Journal, July 17, 2022
3–5) National Bureau of Economic Research, 2021
6, 12, 15, 21) U.S. Bureau of Economic Analysis, 2022
7) Reuters, July 15, 2022
8–9, 17–18) U.S. Bureau of Labor Statistics, 2022
10) The Wall Street Journal, July 14, 2022
11) The Wall Street Journal, July 4, 2022
13–14) MarketWatch, July 5, 2022
16) The Wall Street Journal, July 28, 2022
19) Federal Reserve, 2022
20) The New York Times, July 1, 2022

How can Howmet Corporation employees ensure that they are maximizing their pension benefits under the Howmet Salaried Employees Pension Plan? Are there specific contributions or actions that could enhance their benefits over the years of their employment with Howmet Corporation?

Maximizing Pension Benefits: To maximize their pension benefits, Howmet Corporation employees should focus on accumulating years of service and ensuring they meet the eligibility criteria for the highest percentage of compensation credits under the pension plan. Employees should review their benefit statements regularly, especially considering how age and years of service affect their pension accrual. Consulting financial advisors or using Howmet's retirement planning tools can also aid in making strategic decisions about retirement timing and additional personal savings to complement their pension(Howmet Corporation_July…).

In what situations might employees at Howmet Corporation find themselves ineligible for pension plan benefits? What steps should they take, if they suspect they fall into such categories, to clarify their eligibility status?

Ineligibility for Pension Benefits: Employees at Howmet Corporation might be ineligible for pension benefits if they are not classified as salaried employees hired before January 1, 2002, or if they leave the company before accruing sufficient vesting service (three years or more). If employees believe they fall into a category of ineligibility, they should contact the plan administrator or consult HR to clarify their status, especially regarding vesting service(Howmet Corporation_July…).

Given the complexities of the Howmet Corporation Pension Plan, what resources are available for employees to understand their pension calculation, and how can they access such resources through Howmet Corporation?

Understanding Pension Calculation: Employees can access resources like the Your Benefits Resources (YBR) platform or call 1-888-ALCOA123 for assistance in calculating their pension benefits. These tools offer detailed projections and estimates based on individual account balances, years of service, and compensation, allowing employees to plan for retirement effectively(Howmet Corporation_July…).

With the elder workforce approaching retirement, how does the Howmet Corporation Pension Plan accommodate early retirees, and what factors should employees consider when deciding the optimal time to retire?

Early Retirement Considerations: The Howmet Corporation Pension Plan allows early retirement starting at age 55, with a reduced benefit. Employees should weigh the impact of reduced payments against their financial needs and Social Security options. Additionally, delaying retirement can increase benefits significantly. Employees should use the available calculators and consult financial advisors to determine the optimal retirement age(Howmet Corporation_July…).

What are the specific implications of the Internal Revenue Service (IRS) limitations for Howmet Corporation employeesâ€™ pension benefits, and how might these changes affect future retirement planning?

IRS Limitations and Future Planning: IRS limitations affect pension benefits by capping the maximum benefit amount that can be received, which for defined benefit plans is subject to annual adjustments. Employees nearing high compensation levels should consider how these caps might limit their pension payouts and integrate personal savings strategies, such as 401(k)s or IRAs, into their overall retirement plan(Howmet Corporation_July…).

How does the Howmet Corporation Pension Plan protect employees' rights under ERISA, and what recourse exists for employees who believe their rights have been violated during the pension application process?

ERISA Protections: The Howmet Corporation Pension Plan is governed by the Employee Retirement Income Security Act (ERISA), ensuring that employees' rights are protected. If employees believe their rights have been violated during the pension application process, they can file a claim with the Benefits Management Committee and, if necessary, pursue an appeal or legal recourse under ERISA(Howmet Corporation_July…).

For Howmet Corporation employees planning their estates, how essential is it to name beneficiaries in the pension plan, and what process should they follow to ensure that their beneficiaries are correctly registered?

Naming Beneficiaries: It is essential for Howmet Corporation employees to name beneficiaries for their pension plan, especially to ensure that survivor benefits are properly allocated. Employees can update beneficiary information through the YBR platform or by submitting the appropriate forms to HR. Spousal consent is required if designating a non-spouse beneficiary(Howmet Corporation_July…).

Howmet Corporation employees often have questions regarding survivor benefits. What provisions does the Howmet Pension Plan have in place for surviving spouses, and how do these benefits differ based on the employee's marital status at retirement?

Survivor Benefits: The Howmet Pension Plan offers survivor benefits, which provide ongoing payments to a spouse or designated beneficiary. For married employees, the default option is a joint and survivor annuity, which ensures a percentage of benefits continues for the surviving spouse. Single employees can designate other beneficiaries, but should review their options carefully to ensure proper coverage(Howmet Corporation_July…).

What are the essential milestones employees of Howmet Corporation should be aware of regarding vesting service under the pension plan, and how does this vesting impact their eventual payout?

Vesting Milestones: Employees become vested in the Howmet Pension Plan after completing three years of service or reaching age 65. Once vested, employees have a right to receive pension benefits even if they leave the company before retirement age. Knowing these milestones helps ensure employees fully benefit from their time at Howmet(Howmet Corporation_July…).

If Howmet Corporation employees have further questions regarding their benefits as detailed in the document, what steps should they take to contact the plan administrator, and what information will they need to provide for personalized assistance?

Contacting the Plan Administrator: Employees with further questions about their pension benefits should contact the plan administrator through the YBR website or by calling 1-888-ALCOA123. Employees will need their Social Security number, date of birth, and user ID to access personalized assistance(Howmet Corporation_July…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Pension Plan Information: Name of Pension Plan: Howmet Aerospace Pension Plan Years of Service and Age Qualification: Employees typically need to have a minimum of 5 years of service to qualify for the pension plan. The plan is available to employees who are 21 years old or older. Pension Formula: The pension benefit is calculated based on a formula that considers years of service and average salary during the highest-paid years. Specifics can vary, so it’s best to refer to the plan document for precise details. 401k Plan Information: Name of 401k Plan: Howmet Aerospace 401(k) Plan Qualifications: Employees are eligible to participate in the 401(k) plan immediately upon hire. The plan includes company matching contributions based on employee contributions. Details of the Plan: The Howmet Aerospace 401(k) Plan offers a range of investment options, and employees can contribute up to the maximum limit set by the IRS.

Restructuring and Layoffs: In early 2024, Howmet Aerospace announced a restructuring plan aimed at improving operational efficiency. This plan included layoffs impacting approximately 2% of their workforce. The restructuring is part of their broader strategy to streamline operations and enhance profitability in a challenging economic environment. The importance of addressing this news lies in its impact on employees and the company's operational effectiveness amid current economic uncertainties.

Howmet Aerospace provides stock options and RSUs to eligible employees as part of their compensation package. For 2022, 2023, and 2024, the company offers these benefits to key employees, executives, and directors. Specific plans and eligibility criteria are outlined in their annual reports and proxy statements.

Healthcare Terms/Acronyms: HSA (Health Savings Account): Offers tax-advantaged savings for healthcare expenses. FSA (Flexible Spending Account): Allows employees to set aside pre-tax income for eligible expenses. HDHP (High Deductible Health Plan): A health plan with lower premiums and higher deductibles. Health Benefits Overview: Howmet Aerospace provides comprehensive health insurance options including medical, dental, and vision coverage. They offer both HSA and FSA options, alongside a range of wellness programs. Additional benefits include employee assistance programs and telemedicine services.