Boeing Co., Chicago, is offering an option of a lump-sum payout or an annuity to 40,000 former employees who have not yet retired, the first time the company has offered such choices from its existing defined benefit plans.
The former employees, mostly non-union, have until Friday to decide; they can also elect to remain in the defined benefit plans.
“It will obviously make a dent in our pension obligations going forward, depending on how many accept” the offer, said Ron Taylor, Boeing spokesman.
Regardless of when they would be scheduled to retire, former employees who accept the lump sum will receive their payment in December and those who accept the annuity will begin to receive their monthly annuity payments in December as well, Mr. Taylor said.
“We’re giving the former employees the opportunity to take control and decide when to retire and how to manage their money,” Mr. Taylor said.
The move “is part of Boeing long-term strategy to try to control our pension obligations,” Mr. Taylor said.
Boeing is not disclosing how many of the former employees have accepted the offer, which Boeing initially made Sept. 5.
Boeing will manage the annuity payments through its defined benefit plans rather than sell those particular obligations and assets to an outside annuity provider, Mr. Taylor said.
The former employees who choose to stay in a defined benefit plan will begin receiving their pension benefits as scheduled under the terms of their plans, Mr. Taylor said. Those former employees who choose the annuity will receive a reduced rate, depending on when they would have retired under the defined benefit schedule, Mr. Taylor said.
As of Dec. 31, Boeing had $58.1 billion in pension assets and $68.6 billion in pension obligations, consolidated from the defined benefits plan the company sponsors and oversees.