The last few weeks have been a turbulent time for all of us. I’ve had a number of clients reach out to me asking about their pension plans. I noticed many of these people reaching out happened to be OXY clients. Because of that I’ve decided to write this blog post addressing their concerns. Here is a deep dive into the OXY employee pension plan.
OXY Retirement Plan (Defined Contribution Plan)
The OXY Retirement Plan is funded entirely by OXY. It is a very important part of OXY’s effort to help you achieve a comfortable retirement. You automatically participate beginning on your date of hire.
- All non-union, full-time and part-time employees
- Union-represented employees if provided for in the collective bargaining agreement
- You are fully vested after three years of OXY service
- 7% of your eligible pay up to the Social Security Wage Base (SSWB) ($137,700 in 2020 )
- PLUS 12% of your eligible pay above the SSWB
Note: Retirement contributions will be credited to the Supplemental Retirement Plan instead of the Retirement Plan if your annual base pay during the year exceeds the annual threshold amount ($285,000 in 2020).
Contribution Limits 2020:
- Annual Compensation Limit = $285,000
- Maximum Contribution Limit =$57,000
- Before-tax, Roth and after-tax employee contributions to the 401(k) Plan (excluding catch-up contributions)
- OXY’s company matching contributions to the 401(k) Plan
- OXY’s annual contributions to the Retirement Plan
OXY Retirement Plan
- OXY has a unique plan because you can decide how all contributions are invested.
- There are various investment fund options, each offering a different risk and return profile
When You Receive Your Account:
- Your Retirement Plan account becomes payable when you retire, become totally and permanently disabled, die, or otherwise terminate your employment with OXY.
- In-service withdrawals of your vested balance are available at age 60, the plan’s normal retirement age.
When you decide to retire or would like to distribute your pension, your entire retirement account balance remains tax-deferred until you request a distribution. You (or your designated beneficiary, in the event of your death) may request distribution after you leave OXY or retire.
Supplemental Retirement Plan (SRP):
Certain IRS limits may reduce the annual amounts OXY may contribute to your Retirement Plan and 401(k) Plan. If OXY’s contributions to the Retirement Plan or 401(k) Plan are limited by these governmental caps, OXY will make contributions to the nonqualified Supplemental Retirement Plan (SRP). The SRP (formerly called the Supplemental Retirement Plan II or SRPII) is entirely paid by OXY.
- Immediate Straight Life Annuity: Provides a fixed monthly payment for your life. No monthly payments will be made after your death.
- Total Lump-Sum Payment: A single cash payment of your vested balance. The cash payment can be rolled over to an IRA or to a qualified employer plan.
- Partial Cash Distribution: A request for a specified dollar portion of your vested balance. The cash payment can be rolled over to an IRA or to a qualified employer plan. Your remaining balance will continue to participate in the fund investment performance.
- Immediate 10-year Term Certain and Continuous Annuity: Provides fixed monthly payments for your life with a guarantee by the insurance company that a minimum of 120 payments will be made even if you die before receiving all of them. Your designated beneficiary under the annuity will receive the remaining payments.
- Immediate Joint and Survivor Annuity: Provides fixed monthly payments for your life. On your death, 50%, 75% or 100% (depending on the percent you elect) of the original monthly payment will continue for the life of your joint annuitant. If you die, joint annuitant payments are payable only to the individual you name when you select this option. You may not change your joint annuitant after annuity payments begin. If you name your spouse as your joint annuitant, the annuity is payable only to that spouse—not to anyone else you may marry at a later date.
- Total Deferral: Defers distribution of your vested balance, but not beyond the year in which you reach age 72 at which time you will be required to begin receiving required minimum distributions (as discussed in Required Minimum Payments). You may revoke your deferral election at any time by submitting another distribution request.
Thinking about what to do with your pension is an important part of planning for your retirement at OXY. Should you take the Lump Sum or Annuity? When should you take it? What is best for you and your family?
- Determine if you should take the OXY Pension as a Lump Sum or Annuity.
- How do interest rates affect your decision?
- OXY will need you to provide documents that show proof of birth, marriage, divorce, Social Security number, etc., for you and your spouse/legally recognized partner.
- OXY has Beneficiary Designation online to make updates to your beneficiary designations, if applicable to your pension program. Please read your SPD for more details.
If you are looking for more details about your benefits, reach us at TechStaffer.
- “Retirement Plans-Benefits & Savings.” U.S. Department of Labor, 2019, www.dol.gov/general/topic/retirement.
- “Generating Income That Will Last throughout Retirement.” Fidelity, 22 Jan. 2019, www.fidelity.com/viewpoints/retirement/income-that-can-last-lifetime.
- OXY Summary Plan Description, 2017