Lockheed Martin froze its non-union pension in two steps. Pay earned after December 31, 2015 stopped counting toward the benefit, and credited service stopped after December 31, 2019. The salaried plans were fully frozen on January 1, 2020. For long-tenured Lockheed engineers and program managers, the frozen benefit is still a large asset, and it's worth knowing its lump sum value before any offer arrives.
The Lockheed Martin Salaried Employee Retirement Program
The Salaried Employee Retirement Program is Lockheed's main defined benefit plan for salaried employees. Salaried employees hired after December 31, 2005 were never eligible for it, and new union-represented employees generally aren't eligible for Lockheed's defined benefit plans either. When the salaried plans fully froze in 2020, salaried employees moved to an enhanced defined contribution plan. People who earned benefits before the freeze keep them until they start payments or take a lump sum the plan offers.
How the lump sum is calculated
A plan can't pay a lump sum smaller than the IRS 417(e) present value. For 2026, plans that use November rates apply the November 2025 segment rates:
- Segment 1 (years 1-5): 4.07%
- Segment 2 (years 6-20): 5.15%
- Segment 3 (years 21+): 6.01%
The rates are applied to your monthly benefit, weighted by the IRS 2026 mortality table (Notice 2025-40). At $5,500 per month starting at 65, our calculator puts the 2026 minimum lump sum at about $811,000. Your plan's lookback month may differ, so check your Summary Plan Description.
Before any election window, run the calculator using the accrued monthly benefit on your latest pension statement.
Lump sum offers and transfers so far
Lockheed has used both lump sums and insurer transfers. In August 2021 it bought group annuities from Athene for about $4.9 billion of obligations covering about 18,000 U.S. retirees and beneficiaries, and in June 2022 it did the same for about $4.3 billion covering about 13,600 more. In the fourth quarter of 2023 it made a voluntary lump sum offer to certain former employees who hadn't started payments, paying $414 million to about 6,500 participants. In December 2025 it converted earlier group annuity contracts to buy-outs, transferring $943 million of obligations to insurers.
For retirees moved to an insurer, the monthly check now comes from the insurer, and PBGC coverage is replaced by the insurer's own finances and state guaranty association coverage. None of this tells you whether Lockheed will make another offer. Know what your benefit is worth before one arrives, so you can judge it on your terms rather than under a deadline.
When the annuity beats the lump sum
A large Lockheed annuity, combined with Social Security, can cover most of a retiree's spending without touching invested assets. A lump sum can replicate that, but only with disciplined management over 25 or more years.
The annuity wins if you're healthy, if you don't want to manage a large portfolio, or if the certainty of a monthly check matters more to you than a large balance. It loses if you're in poor health, if you have specific estate goals, or if you're confident you can earn steady returns on the lump sum. The lump sum vs. annuity calculator shows the break-even age for your own numbers.
See the Lockheed Martin pension page for plan status and the sources behind these dates and dollar figures.
Survivor benefits
Lockheed participants who take the annuity choose a form of payment. The single life annuity pays the largest monthly amount and stops at the retiree's death. Joint and survivor forms pay less each month but continue to a surviving spouse. Your election packet shows the exact amounts for each form, so compare those rather than estimates.
For retirees whose spouse has little retirement income of their own, the survivor form usually deserves a hard look. A retiree on a single life annuity who dies at 72 leaves a surviving spouse with no pension income at all. Married participants need written spousal consent to waive the plan's joint and survivor annuity, so don't leave that paperwork to the last week of the window.
Deferred vested participants
Former Lockheed employees who left with a vested benefit are deferred vested participants. Their benefit reflects pay through 2015 and service through 2019 at most, and it can start at the plan's normal retirement age or earlier if they meet the plan's early retirement rules. The nominal benefit doesn't grow while they wait, so its purchasing power falls with inflation.
Check your benefit statement every few years and keep your address current. The annual funding notice ERISA requires the plan to send names the plan administrator. If you've stopped getting it, the plan probably has an old address.
PBGC coverage
For benefits still in Lockheed's plans, PBGC insures a single life annuity starting at 65 up to $7,789.77 a month in 2026. Benefits above that cap wouldn't be fully covered if an underfunded plan were terminated, which is one argument some high-benefit retirees make for taking a lump sum when it's offered.
Benefits moved to an insurer are no longer backed by PBGC. They rely on the insurer and on state insurance guaranty associations, whose limits vary by state. If your benefit's value is above your state's limit, a transfer reduces your effective coverage. Find out whether your benefit was transferred before assuming PBGC still applies.
Comparing a lump sum offer to the annuity
Here's a simple income test. A $780,000 lump sum invested at 6% a year produces $46,800 a year. A $5,500 monthly annuity pays $66,000 a year. To match the annuity's income from interest alone, the lump sum would have to earn about 8.5% a year. That's a high bar for a conservative or moderate portfolio over 20-plus years, though the lump sum keeps its principal for heirs and the annuity doesn't.
Social Security coordination
Lockheed jobs paid into Social Security, so the Windfall Elimination Provision never applied to Lockheed pensions. WEP has since been repealed anyway by the Social Security Fairness Act for benefits payable after December 2023.
A common plan for healthy Lockheed retirees is to live on the pension while delaying Social Security to 70. A retiree with a $5,500/month Lockheed annuity and a $2,600/month Social Security benefit at 70 has $8,100/month of guaranteed income at 70 without touching invested assets.