For Chevron employees and retirees
Planning for Chevron employees, with age 60 on the calendar.
For employees hired since 2008, the Chevron Retirement Plan credits 11% of highest five-year average earnings for each year of service before age 60 and 14% for each year after, and a lump sum taken before 60 is discounted 4.5% a year. We help Houston employees and retirees, including households that moved from San Ramon, weigh that line against the rest of the balance sheet.
The situation
Two pension formulas, a headquarters move, and a smaller company
Chevron announced on August 2, 2024 that its headquarters would move from San Ramon, California to Houston, with corporate functions migrating over five years. It then counted roughly 7,000 employees in the Houston area and about 2,000 in San Ramon; by July 2025 Harris County listed Chevron as its ninth-largest employer, at 13,330 people. For a household that made the move, the state line now runs through equity awards, a home sale, and residency records.
Two employer plans sit under most of those households. The Employee Savings Investment Plan matches 8% of regular pay when you contribute 2%. The Chevron Retirement Plan is a pension funded entirely by the company, vested after five years, payable as a lump sum or an annuity, and its formula depends on hire date. Employees hired before January 1, 2008 accrue 1.6% of highest average earnings per year of service, less a Social Security offset, calculated first as an age-65 annuity. Employees hired on or after that date accrue a lump sum directly: 11% of highest five-year average earnings per year of service before 60, and 14% per year after.
The backdrop is a company reorganizing. In February 2025 Chevron said it expected to reduce its workforce by 15% to 20%, with most of the reduction complete before the end of 2026. Its 2025 annual report targets $3 billion to $4 billion in structural cost reductions by the end of 2026 and carried $683 million of accrued severance at year-end, expected to be substantially paid during 2026. The Hess acquisition closed on July 18, 2025, bringing employees with legacy plans of their own. For many people the retirement date is arriving as a decision, and sometimes as a letter.
Why it’s complex
Five Chevron-specific decisions
Age 60 is the pension’s bright line
For post-2007 hires, the lump sum is unreduced at any date from 60 to 65, and the accrual rate rises from 11% to 14% at 60. Take it earlier and each year before 60 costs 4.5%, compounded. Pre-2008 hires face a separate reduction table built on age and points.
The Rule of 55Lump sum or annuity, and which one rates move
For post-2007 hires the formula sets the lump sum; interest rates only change what it buys as an annuity. For pre-2008 hires the annuity is the base and the lump sum is its actuarial equivalent, priced on IRS segment rates from the fifth, fourth and third months before your start date. Rising rates shrink it.
Turning savings into incomeThe California-to-Texas move
California decides residency by your closest connections, not your mailing address, and it keeps taxing RSU income for the share of workdays spent there between grant and vest. Federal law bars it from taxing a nonresident’s pension or 401(k). Texas has no personal income tax.
When tax planning distorts the portfolioThe ESIP match is 8% for 2%
Contribute 1% of regular pay and Chevron adds 4%; contribute 2% or more and it adds 8%, vested immediately, on pay that includes incentive-plan payouts. Contributions can be before-tax, Roth, or after-tax; in 2026 the age-50 catch-up must be Roth if last year’s wages topped $150,000.
Catch-up contributions in 2026Retiree medical runs on points
Age plus years of service sets the company’s share of retiree medical. On the 90-point scale that applies to most retirements since 2005, 60 points earns 50% of the starting contribution, 80 points 75%, and 90 points 100%. One more year of work adds two points.
Medicare’s enrollment windowHypothetical illustration
How the age-60 line changes a post-2007 pension
Hypothetical illustration, in round numbers, for an employee hired after 2007 with highest five-year average earnings of $200,000 held constant. Real pay usually rises and service counts to the month, so actual figures differ. Education only, not a forecast or a recommendation.
| Leaves at | Years of service | Formula lump sum | Paid immediately | Paid at 60 |
|---|---|---|---|---|
| 58 | 23 | $506,000 | About $463,000 (two years of 4.5% discount) | $506,000 |
| 60 | 25 | $550,000 | $550,000 | $550,000 |
| 62 | 27 (two at the 14% rate) | $606,000 | $606,000 | n/a |
Two things stand out. Leaving at 58 does not force the discount: a vested benefit can stay in the plan and be paid, unreduced, from 60. And the two years after 60 add $28,000 each rather than $22,000. Whether they are worth working is a question about health, the role, and what else the household needs, not only the pension.
Equity has its own line. Effective 2026, Chevron’s annual LTIP awards are half performance shares and half RSUs, and stock options are no longer granted. Under the award agreements filed for 2026 grants, leaving at 55 with 10 years of service, or at 65, after six months’ notice or an involuntary separation other than for misconduct keeps the newest grant vesting pro rata and earlier grants on schedule; 2024 and 2025 grants use an age-and-points test in their own agreements.
Sources: Chevron Retirement Plan SPD, hired on or after January 1, 2008 (effective January 1, 2025); ESIP SPD (effective January 1, 2026); Company Contributions to Health Benefits supplement (effective January 1, 2025); Chevron 2026 proxy statement. Terms vary by hire date, legacy company, and award; your plan documents govern.
Our approach
A plan that reads the hire date first
We read the public plan documents before the first meeting, so it starts with your specifics: hire date, BenefitConnect pension estimate, ESIP statement, grant history, and, if you moved, the year you left California.
Capture the full match
Contribute at least 2% for the 8%, choose between before-tax and Roth while pay is lower, and decide what the Chevron Stock Fund should be inside a portfolio that already depends on one company.
Manage the overlap
With RSUs and performance shares vesting on their own calendars and incentive-plan payouts counted as regular pay, we plan each year’s tax picture and keep company stock at a size the household can carry.
Price each exit date
Model leaving at 58, 60, and 62 side by side: the pension lump sum and its discount, the annuity conversion, the equity that keeps vesting under each grant’s agreement, retiree medical points, and any severance terms.
Turn it into income
Sequence the pension, ESIP, and taxable accounts; use the low-income years before Social Security for Roth conversions; and handle required distributions at 73 or 75.
The work
What you’ll work through with us
- Pension lump-sum versus annuity analysis, including the age-60 discount and survivor options
- Retirement-date modeling around 55 with 10 years, 60, and 65
- ESIP deferral strategy: before-tax, Roth, and after-tax, against the 2026 limits
- An equity map of RSUs and performance shares by grant, tranche, and vest date
- Retiree medical points and health coverage from retirement to Medicare
- California residency records and the California-sourced share of equity income after a move
- Severance-year tax planning when a package, a lump sum, and a vest land in the same year
- Coordination with your CPA and estate attorney, including community-property titling in Texas
Planning at the firm is led by Theo Halbardier, CFP®, CIMA®, CAIA®, the firm’s founder. We are fee-only: no commissions, no product sales. About Theo
Questions
Common questions from Chevron employees
Are you affiliated with or endorsed by Chevron?
No. The Financial Sciences Company is an independent, fee-only registered investment adviser. We are not affiliated with, endorsed by, or sponsored by Chevron or its benefit plans, and we are not one of the guidance providers Chevron offers employees. We work from Chevron’s public plan documents and SEC filings and, with your permission, your own statements.
My role was eliminated at 58. Should I take the pension lump sum now or wait until 60?
Under the post-2007 formula, a lump sum paid two years before 60 is reduced by about 8.4%, but a vested benefit can stay in the plan and be paid unreduced from 60. Waiting is not automatically right: it depends on what the household lives on in the meantime, the other income that year, and whether an annuity form suits you better. We model both dates before the election. Pre-2008 hires use a different reduction table.
I was hired before 2008. Do the 11% and 14% rates apply to me?
No. Employees hired before January 1, 2008 accrue 1.6% of highest average earnings per year of service, less a Social Security offset, calculated first as an age-65 single life annuity. Early payment is reduced by a table based on age and points, and the lump sum is the actuarial equivalent of that annuity, so the interest rates at your start date change the amount. Legacy Gulf, Texaco, Unocal, and Caltex service can add provisions of its own.
I moved from San Ramon to Houston. Does California still tax me?
It depends on what the income is and where it was earned. California taxes RSU income in proportion to the workdays you spent there between grant and vest, and nonstatutory option income between grant and exercise, even after you leave. Once you are a genuine nonresident it does not tax your Chevron pension, ESIP distributions, or the gain on shares sold later. It presumes residency for anyone who spends more than nine months of a year there and judges the rest by the strength of your ties, so a dated file showing when those ties moved matters.
What happens to my RSUs and performance shares if I accept a severance package?
Effective 2026, annual awards are half performance shares and half RSUs. Under the agreements filed for 2026 grants, an involuntary separation other than for misconduct at age 55 with 10 years of service, or at 65, keeps the most recent grant vesting pro rata and lets earlier grants finish on schedule; 2024 and 2025 grants apply an age-and-points test instead. Read each grant’s agreement before signing a package.
How do we plan taxes in a year with severance, a lump sum, and a vest?
Severance is wages, usually withheld at the 22% flat supplemental rate, which can fall short of the bracket the total puts you in. A pension lump sum rolled directly to an IRA is not taxed that year and avoids the 20% mandatory withholding; one paid to you is taxed. Vested RSUs are ordinary income at vesting. We map what must land in the year, what can be deferred, and whether a charitable gift or a Roth conversion belongs in it. Confirm the specifics with your tax professional.
Reviewed by Theo Halbardier, CFP® · Updated September 2026 · Figures current for 2026
Bring your pension estimate.
The first conversation is 30 minutes. A BenefitConnect pension estimate and a recent ESIP statement help, but no preparation is needed.
We work with individuals and families across Texas, meeting by video or in person by arrangement.
Meet with usChevron and its logo are trademarks of Chevron Corporation or its affiliates. The Financial Sciences Company is an independent, fee-only registered investment adviser and is not affiliated with, endorsed by, or sponsored by Chevron. Plan details summarized here come from public sources and may change; your plan documents govern.