Lockheed Martin's pension situation is more layered than most. A two-step freeze, two large transfers to Athene in 2021 and 2022, and the jump in interest rates since 2022 have all changed the picture for LM retirees and deferred vested participants. Here's what you need to know to estimate your benefit and make a decision.
The plan structure: salaried vs. hourly
Lockheed Martin has separate pension plans for salaried and hourly employees. The main salaried plan is the Lockheed Martin Corporation Salaried Employee Retirement Program. Salaried employees hired after December 31, 2005 aren't eligible for any of the defined benefit plans, and new union-represented employees generally aren't either. Lockheed's 10-K doesn't publish the benefit formulas, so use your own pension statement for the dollar amount.
The non-union freeze happened in two stages. Pay earned after December 31, 2015 stopped counting toward the benefit. Credited service kept counting for four more years and stopped after December 31, 2019. The salaried plans were fully frozen on January 1, 2020, and salaried employees moved to an enhanced defined contribution plan. So your frozen benefit uses your pay through 2015 and your service through 2019.
The Athene transfers
Lockheed Martin bought group annuity contracts from Athene twice. Both covered retirees and beneficiaries in the Salaried Employee Retirement Program and the Aerospace Hourly Pension Plan:
- August 2021: about $4.9 billion of obligations for about 18,000 U.S. retirees and beneficiaries
- June 2022: about $4.3 billion of obligations for about 13,600 more
In December 2025 Lockheed also converted earlier group annuity contracts to buy-outs, transferring another $943 million of obligations.
If you're already collecting a monthly pension and your payments started coming from Athene rather than Lockheed Martin directly, your obligation has been transferred. The monthly amount doesn't change. The payer changes. So does your PBGC coverage: once an obligation transfers to an insurance company, it exits the PBGC system.
What the PBGC covers (and doesn't)
For benefits still inside the LM pension plan, the PBGC provides a federal backstop. If LM's plan were ever terminated in an underfunded state, the PBGC would cover benefits up to $7,789.77 per month for a 65-year-old retiree in 2026 (the limit adjusts annually; see pbgc.gov for the current figure).
For the substantial portion of LM retirees whose obligations transferred to Athene, PBGC coverage ended at the moment of transfer. Their protection is Athene itself, backed by state insurance guaranty associations whose coverage limits vary by state. For retirees with large monthly benefits, the value of the annuity can exceed their state's limit. Look up your own state's limit instead of assuming the old PBGC coverage still applies.
The $7,000 mandatory cash-out rule
If your vested benefit is small enough, the plan may pay you out instead of carrying a small monthly obligation for decades. SECURE 2.0 (section 304) lets a plan raise its involuntary cash-out limit from $5,000 to $7,000 of present value. Whether LM's plans use the higher limit is in your Summary Plan Description.
This mostly affects former LM employees who worked briefly, vested and moved on. Make sure LM has your current address. Unclaimed pension benefits are a real problem for people who changed addresses without updating plan records.
How to calculate your lump sum under 2026 segment rates
For eligible LM participants, lump sum offers must use the IRS 417(e) segment rate formula. The same formula governs every private sector defined benefit plan in the U.S. Verizon uses it. AT&T uses it. GM uses it. The inputs differ; the formula doesn't.
The 2026 segment rates from the November 2025 IRS publication:
- Segment 1 (payments in years 1-5): 4.07%
- Segment 2 (payments in years 6-20): 5.15%
- Segment 3 (payments in years 21 and beyond): 6.01%
LM's plan documents specify which lookback month applies. It may not be November. Check your Summary Plan Description or the election notice itself. These are the minimum rates: a plan can't pay a lump sum smaller than the 417(e) present value, though its own formula can produce more.
The pension lump sum calculator on this site runs the IRS 417(e) formula with the IRS 2026 mortality table (Notice 2025-40). Enter your monthly benefit, your current age, and the segment rates. It gives you a formula-based present value estimate in about 10 seconds.
Why rates matter more now than in 2019
The November 2019 segment rates, which many calendar-year plans used for 2020, were 2.04%, 3.09% and 3.68%. The November 2025 rates used for 2026 are 4.07%, 5.15% and 6.01%. Run a $4,000/month benefit starting now for a 60-year-old through our calculator, holding the 2026 mortality table fixed, and you get about $809,000 at the 2019 rates and about $649,000 at the 2025 rates. Nothing about the pension changed. The discount rate moved, and about $160,000 of lump sum value disappeared.
This is a good reason to look seriously at the annuity option rather than assuming the lump sum is automatically better. At 2026 rates, your annuity buys more relative income per dollar of lump sum forgone than it did in 2020. The monthly guarantee is worth more when the discount rate is high.
Lump sum vs. monthly benefit: the decision
Four factors determine whether the lump sum or the annuity is right for your situation. Health and longevity. Other income sources. Surviving spouse needs. Investment discipline.
The break-even age depends on your benefit amount, form of payment and what you'd earn on the lump sum. Run your own numbers instead of trusting a rule of thumb. Live well past the break-even age and the annuity pays more in total. Die before it and the lump sum wins.
If you have a surviving spouse who relies on the pension income, a joint-and-survivor annuity extends protection to them. A lump sum in an IRA passes whatever remains, which is potentially more or less than the annuity value depending on how it's invested and how withdrawals are managed. There's no right answer: only the right answer for your specific numbers and circumstances.
The lump sum vs. annuity calculator runs the break-even analysis with your actual numbers. For LM-specific plan context, including how the Athene transfers affect deferred vested participants in different plan tiers, see the Lockheed Martin pension guide. A fee-only fiduciary who charges by the hour and earns no commissions is worth paying for a one-time analysis before you sign an irreversible election form.