3M froze its defined benefit pension for most salaried employees effective January 1, 2021. If you worked at 3M before that date and earned a pension, those accrued benefits are preserved. Here's what they're worth in 2026 and what your lump sum options look like.
The 3M Employee Retirement Income Plan
The 3M Employee Retirement Income Plan (ERIP) is a traditional final-average-pay defined benefit plan. Your benefit is based on your years of service and your average compensation during your career. 3M froze further benefit accruals for most salaried workers on January 1, 2021, simultaneously enhancing the company 401(k) match to make up for the lost pension accrual.
If you were an active salaried 3M employee before 2021, your benefit reflects service up to the freeze date. If you were already retired or a deferred vested participant, your benefit is unaffected by the freeze.
Monthly benefits for long-tenured 3M retirees typically range from $1,900 to $5,500 depending on years of service and compensation history. A 30-year professional-level employee might have an accrued benefit of $3,000 to $4,500/month.
2026 lump sum calculation
When 3M offers a lump sum window, it uses the IRS 417(e) formula to convert your monthly benefit into a present value. The 2026 IRS segment rates are:
- Segment 1 (years 1-5): 5.03%
- Segment 2 (years 6-20): 5.35%
- Segment 3 (years 21+): 5.57%
3M uses the November segment rates for its plan year. At current rates, a $3,000/month benefit for a 65-year-old calculates to approximately $400,000 to $440,000 as a lump sum. A $4,500/month benefit at the same age produces roughly $600,000 to $660,000.
These numbers are meaningfully lower than they would have been in 2020-2021, when rates were near historic lows. A $3,000/month benefit would have been worth over $600,000 under those conditions. Rate normalization has reduced lump sum values by 25-35% since then.
3M's lump sum buyout windows
3M has offered periodic lump sum windows to deferred vested participants: former employees who left before reaching retirement age with a vested benefit. These windows are separate from the normal retirement lump sum election available when you actually retire from the company.
3M has not announced a 2026 buyout window as of this writing, but the company has incentives to reduce its pension liability over time. Deferred vested participants are the primary target for these windows. If you left 3M before retirement age, watch for communications from Fidelity, which administers the 3M pension.
Should you take the lump sum?
The break-even question matters here. At current rates, a 65-year-old 3M retiree taking a $440,000 lump sum instead of $3,000/month in annuity payments breaks even around age 80-83. If you're in good health and your family history suggests longevity into your mid-80s or beyond, the annuity wins on raw math.
The lump sum makes sense if you're in poor health, if you want to leave an asset to heirs, or if you have other guaranteed income (Social Security, another pension) that covers your baseline expenses. In that case, the lump sum becomes discretionary capital rather than a survival income stream.
Whatever you decide: roll any elected lump sum directly to an IRA. A $440,000 lump sum taken as cash triggers roughly $110,000 to $145,000 in federal and state income taxes in the year of receipt. A direct rollover preserves the full amount, tax-deferred. Use the main PensionMath calculator to run your specific numbers. Full 3M plan information is at the 3M employer pension page.