Lockheed Martin Corp. is offering about 33,000 former salaried employees who are eligible for but not yet receiving monthly pension benefits the opportunity to convert their future annuity to a lump-sum benefit.
"The voluntary option provides financial flexibility to those no longer with the company, and allows us to balance our business needs and strengthen the plan by reducing its size and the potential future volatility of the plan's obligation," the company said in a statement.
The Bethesda, Maryland-based aerospace company said eligible former employees—those who terminated employment prior to Jan. 1, 2012—who opt for the lump sum will receive the payment about three weeks after paperwork is approved.
Roughly a dozen other big, well-known employers have made annuity-to-lump-sum benefit conversion offers in recent months, including Equifax Inc., Ford Motor Co., General Motors Co., NCR Corp. and The New York Times Co. So far, only GM has publicly disclosed the percentage of eligible participants who accepted the offer. About 30 percent of eligible salaried retirees accepted the automaker's offer to convert their monthly annuity to a lump sum benefit, GM has disclosed.
When pension plan participants take lump-sum benefits and are no longer covered by the plan, their former employers do not have to worry about how interest rate fluctuations and investment results could affect how much they will have to contribute to their pension plans to fund future annuity payments.
In addition, when participants take lump sums and move out of a pension plan, employers can reduce certain fixed costs, such as the payment of sharply rising premiums to the Pension Benefit Guaranty Corp.