Lockheed Martin announced July 1 that it will freeze its salaried defined benefit pension plan and transition employees to an enhanced defined contribution retirement plan.
The change will take effect in a two-step approach, beginning Jan. 1, 2016, with the freeze of pay-based benefits and concluding with the freeze of service-based benefits Jan. 1, 2020. The company expects that the plan will be fully frozen effective Jan. 1, 2020.
When the freeze is complete, the majority of Lockheed Martin salaried employees, including approximately 25,000 not in the pension plan, will have transitioned to a retirement plan that offers up to 10 percent of employeesí salary annually in company contributions.
While the salaried pension plan was closed to new participants in 2006, approximately 48,000 employees of Lockheed Martin’s 113,000 employees are participating. An additional 250,000 retirees and former employees are in the plan.
Retirees already collecting benefits and former employees with a vested benefit will not be affected by the change. Current and former employees will also keep all benefits already earned in their pension plan to date.
The company expects that these changes will have no impact on second quarter 2014 earnings results. Full year 2014 estimates for pension expense calculated under Financial Accounting Standards will be updated and communicated when the company reports second quarter results July 22, 2014.