For Lockheed Martin employees and retirees
Planning for Lockheed Martin employees, around a pension that stopped growing.
Lockheed Martin froze its salaried pension in two steps: pay on January 1, 2016 and service on January 1, 2020. The benefit is now a fixed number; the Capital Accumulation Plan and the 401(k) carry the growth. We help Fort Worth and Grand Prairie employees decide when to start the frozen benefit, in which form, and how the rest of the balance sheet fits around it.
The situation
Two retirement systems inside one badge
Lockheed Martin employed about 123,000 people at the end of 2025, roughly 19% of them under collective bargaining agreements. About 19,000 work at the F-35 production facility in Fort Worth, and Grand Prairie is home to Missiles and Fire Control, where the 2026 proxy describes plans to triple Patriot PAC-3 MSE production and quadruple THAAD. Careers here follow programs and clearances, and a ramp or a transition can move a household’s timeline.
Salaried employees hired before 2006 usually hold a frozen pension plus the savings plan. The formula in the 2026 proxy multiplies 1.25% of pay below the Social Security wage base (1.5% above it) by credited service through 2019 and by the highest three years of pay in the ten years ending 2015. Nothing earned since changes that number. Employees hired in 2006 or later never entered the pension and received Capital Accumulation Plan contributions instead. Since January 1, 2020, both groups receive the same company money: an automatic 6% of base pay plus a 50% match on the first 8% contributed, up to 10% in all.
For retirees, the plan itself has been changing hands. Lockheed Martin bought group annuity contracts from Athene for about 18,000 retirees and beneficiaries in 2021 ($4.9 billion) and about 13,600 in 2022 ($4.3 billion), and in December 2025 moved about $943 million of obligations for roughly 9,000 more to insurers. The company states that the amount and timing of those payments do not change. Who stands behind them does.
Hypothetical illustration
Starting a frozen benefit early: what the trade looks like
Under the 2026 proxy’s plan terms, the salaried benefit is unreduced at 60 for employees who leave at 55 or later, and the early-start reduction is steeper for those who left before 55. Assume a $3,000 monthly single-life benefit at the unreduced age. The reductions below are invented to show the arithmetic; your pension estimate carries the plan’s actual factors.
| Scenario | Start age | Monthly benefit | Collected before the unreduced age | Given up each month | Months to catch up |
|---|---|---|---|---|---|
| Left Lockheed Martin at 57 | 57 | $2,400 (illustrative 20% reduction) | 36 × $2,400 = $86,400 | $600 | 144 (about age 72) |
| Left Lockheed Martin at 50 | 60 | $2,100 (illustrative 30% reduction) | 60 × $2,100 = $126,000 | $900 | 140 (about age 71 and 8 months) |
Two facts sit underneath that table. The benefit is fixed in nominal dollars: a $3,000 payment buys about $2,590 of today’s goods after five years of 3% inflation, so the CAP and 401(k) balances have to do the growing. And the survivor form is permanent. We model both before the election is filed.
Why it’s complex
Five Lockheed Martin decisions that compound
When to start the frozen benefit
The benefit can begin as early as 55 at a reduced amount and is unreduced at 60 if you left at 55 or later. The proxy describes annuity forms only: lifetime, joint-and-survivor, life with payments assured for five or ten years, or level income. Your estimate lists the forms offered to you.
Turning savings into incomeIf your annuity moved to an insurer
About 40,600 retirees and beneficiaries have been transferred since 2021. The payment does not change; the payer, the statements, and the backing do. The 2022 release notes that transferred benefits carry the protections of your state’s guaranty association.
How we work with retireesThe CAP and the match carry the growth
Company money is up to 10% of base pay: 6% automatic plus 50% of the first 8% you contribute. The proxy describes deferrals of up to 40% of base salary on a pre-tax, Roth, or after-tax basis, so the mix is a yearly decision.
Catch-up contributions in 2026Supplemental Savings Plan elections
Above the IRS limits, deferrals and match go to the NQSSP and the 6% to the NCAP; both pay after separation as a lump sum or up to 25 annual installments. The DMICP defers annual incentive and LTIP awards. These are unsecured company promises, and the elections set tax for years.
How we approach tax planningRSUs, PSUs, and the 55-with-10 line
RSUs cliff-vest three years after grant; PSUs and the cash LTIP pay on a three-year performance period. Six months after a grant, leaving at 55 with 10 years of service, or at 65, counts as retirement and the awards keep vesting. Layoff prorates them; other departures forfeit what is unvested.
Equity compensation and concentrated stockSources: Lockheed Martin 2025 Form 10-K; 2026 proxy statement (formula, ages, forms, contributions); pension plan change FAQ; company releases of August 3, 2021, June 27, 2022, and December 18, 2025. As of September 2026; terms vary by hire date and contract, and your plan documents govern.
Our approach
A plan that treats the pension as the fixed piece
The frozen benefit is the one number that will not change, so we start there and build the flexible pieces around it: the savings plan, the nonqualified accounts, equity awards, Social Security, and coverage to 65.
Capture the full 10%
Contribute at least 8% to earn the whole match, settle the pre-tax, Roth, and after-tax mix for the year, and record the frozen pension estimate as a fixed asset.
Mind the two lines
Leaving before 55 changes the pension’s early-start reduction and forfeits unvested RSUs and PSUs; leaving at 55 with 10 years keeps awards vesting and opens the 401(k) Rule of 55. We model dates on both sides.
File the elections in the right order
Pension start date and survivor form, NQSSP and DMICP payout schedules, the year’s final RSU and PSU tax, and coverage between the last day and Medicare.
Let the growth accounts do their job
Sequence withdrawals around a fixed pension, size Roth conversions in the years before Social Security and required distributions, and keep the insurer’s annuity paperwork current.
The work
What you’ll work through with us
- Pension start-date and survivor-form analysis, using the reduction factors on your estimate
- Savings plan strategy: the 8% needed for the full match, pre-tax versus Roth, catch-ups after 50
- NQSSP, NCAP, and DMICP distribution elections, timed against other income
- RSU and PSU planning around the three-year cliff and retirement eligibility
- Departure-date modeling at 54, 55, 60, and 62 side by side
- Health coverage from separation to Medicare
- For transferred annuities: paperwork, beneficiaries, and guaranty coverage
- Coordination with your CPA and estate attorney
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 Lockheed Martin employees
Are you affiliated with or endorsed by Lockheed Martin?
No. The Financial Sciences Company is an independent, fee-only registered investment adviser. We are not affiliated with, endorsed by, or sponsored by Lockheed Martin Corporation, its benefit plans, or IAM District 776. We work from Lockheed Martin’s public filings and, with your permission, your own pension estimate and statements.
Can I take the frozen salaried pension as a lump sum?
We have not found a lump-sum option for the qualified salaried plan in any public source; the 2026 proxy describes annuity forms only. Your pension estimate and summary plan description list the forms available to you, and those documents govern.
When should I start the frozen benefit?
It depends on when you left, your other income, health, and a spouse’s needs. The plan pays a reduced benefit from 55 and an unreduced one at 60 if you left at 55 or later; the reduction is steeper for those who left before 55. Starting early trades more months of a smaller payment for fewer months of a larger one, and the catch-up point often lands in the early 70s. We run your actual factors before you elect.
My pension was moved to Athene. What changed?
Under the company’s announcements, the amount and timing did not change. The payer did: the insurer now issues the payments and tax forms, and the benefit is backed by the insurer and the state guaranty association where you live rather than by the Lockheed Martin plan. Keep the transfer letter and confirm beneficiaries with the insurer.
How should I elect the Supplemental Savings Plan payout?
The NQSSP and NCAP pay after separation as a lump sum or up to 25 annual installments; the DMICP pays in January or July after you leave. Installments can spread income across lower brackets; a lump sum ends the unsecured-creditor exposure sooner. We model the choice with the pension start date, final-year vests, and Social Security as one tax picture.
I am an IAM District 776 member. Does any of this apply to me?
The bargained plans are separate, with their own formulas. Your June 2026 agreement runs through June 18, 2030 and, as reported at ratification, includes a $6,000 bonus, raises of 4% to 6%, and improvements to retirement benefits. The contract summary and your plan documents state the pension and 401(k) terms; the same planning structure applies once those numbers are in hand.
Reviewed by Theo Halbardier, CFP® · Updated September 2026 · Figures current for 2026
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Meet with usLockheed Martin and its logo are trademarks of Lockheed Martin Corporation. The Financial Sciences Company is an independent, fee-only registered investment adviser and is not affiliated with, endorsed by, or sponsored by Lockheed Martin or IAM District 776. Plan details summarized here come from public sources and may change; your plan documents govern.