Q. How can I receive my benefits?
A. The Plan calculates your basic pension benefit as a Basic Annuity, but gives you choices about how your benefit is paid. The options available to you depend on your marital status and whether you are a retiree.
Retirees may choose from any of the payment options described in this section. In addition, the Pre-Social Security Pension is paid monthly until you are eligible for a Social Security benefit or as a lump sum if you elect a lump sum payment for your pension.
If you are not a retiree, but are vested in the Pension Plan when you leave the company, you may choose only a Basic annuity, a Qualified joint and survivor annuity or a Joint annuity.
The amount of your benefit is adjusted if you elect to receive your pension benefit as any option other than a Basic Annuity.
If you are married at the time your benefit begins, your benefit can only be paid as a Qualified Joint and Survivor Annuity — unless you and your spouse agree to another payment option.
When your basic pension benefit is calculated under the formula (find this in the section on Pension Plan basics), it is calculated as a Basic Annuity. The Basic Annuity provides the largest monthly benefit payable from the Plan. It is a monthly benefit paid to you for your lifetime with guaranteed payments for five years. If you die before the five years are completed, payments continue to your beneficiary until this five-year period is completed. The Basic Annuity is also called a "five-year certain and life" annuity. All other payment options are derived from the Basic Annuity.
Qualified Joint and Survivor Annuity (QJSA)
A Qualified Joint and Survivor Annuity is a monthly benefit paid to you for your lifetime. After your death, 50% of the monthly amount you were receiving continues to your surviving spouse (who was your spouse when benefits began) for the rest of his or her life. If you are married at the time your benefit begins, by law you will automatically receive your pension benefit in the form of a QJSA. However you may elect a different payment option, but only if your spouse consents to your election in writing, and that consent is notarized or witnessed.
Electing a QJSA after your pension benefit has already commenced
Ordinarily, once you have commenced your pension benefit as an annuity, you are locked in to the specific payment option you have selected, and cannot elect a new one. An exception applies, however, if you are a retiree who becomes married after commencing your pension benefit in the form of an annuity. In that case, you may elect to convert your benefit into a QJSA, with your new spouse designated to receive any survivor benefits. If you elect this conversion, the amount of your benefit will be adjusted so that your new form of benefit is the actuarial equivalent of your old annuity. You have twelve months following your marriage to elect to convert your benefit to a QJSA. This conversion option is not available to those who elected to receive their pension benefit as a lump sum.
This is a monthly benefit paid to you for your lifetime. You may choose an annuity that pays 1%, 25%, 50%, 75% or 100% of your monthly amount as a survivor's benefit to your designated joint annuitant after your death. Monthly payments continue to your surviving joint annuitant for the remainder of his or her life. Payments under the Joint Annuity are guaranteed at the amount you were receiving for five years (or longer if an Extended Period Certain Annuity is elected in connection with the Joint Annuity) before changing to the survivor's benefit.
Qualified joint and survivor annuity versus 50% joint annuity
A Qualified Joint and Survivor Annuity — while a little larger each month — does not offer the five years of guaranteed payments that the Joint Annuity does, but rather the payment immediately reduces to the 50% QJSA benefit. Additionally, the joint annuitant for the QJSA must be your spouse.
Extended period certain annuity
This form of payment is identical to the Basic annuity, except that you can choose a 10-, 15- or 20-year guarantee period. This option is available only to retirees. The Extended Period Certain Annuity may be combined with the Joint Annuity Option.
This is a single payment of the actuarial value of your Basic Annuity. If you elect the lump sum payment option, you will receive your Pre-Social Security Pension as a single payment. The lump sum payment option is generally available only to retirees.
Additional lump-sum payment options are available to retirees who retire on or after December 1, 2015. In addition to the 100% lump sum payment option, such a retiree may elect to receive 25%, 50% or 75% of their pension in the form of a lump sum with the remaining benefit payable as a monthly annuity.
Terminees are eligible to elect the lump sum payment option under limited circumstances. Only terminees who terminate employment with the Company as a result of a divestment or who receive benefits under a Company-sponsored or Company-funded severance program are eligible. Further, those terminees must elect to receive their benefit as of their earliest commencement date (that is, upon termination of employment if they are already age 50 or older at that time, or when they attain age 50) or they lose the right to elect the lump-sum payment option.
Calculating the Lump sum
As a retiree, you can receive the pension benefit either as an annuity consisting of monthly payments or as a lump sum.
Mortality and interest assumptions are used to convert the stream of annuity payments to a lump sum.
Lump sum assumptions vary depending upon your particular circumstances. To determine what assumptions apply to you, you should access the ExxonMobil Benefits Service Center (EMBSC) Web site or call 1-800-682-2847 at least 90 days but not more than 120 days before you want benefits to begin.
For information about receiving your benefit, refer to Retirement Process Steps found in the Retirement Guide from the Retirement section on Employee Connect, the Human Resources Intranet Site that can be accessed at work by employees.
Additional information is available in the Pension/Retirement section on Employee Connect, the Human Resources Intranet Site that can be accessed at work by employees.
Choosing a payment option
All of the monthly payment options are actuarially derived from the Basic annuity. If you elect a monthly payment option other than the Basic Annuity, the amount of your basic pension benefit is reduced because these payments are guaranteed for two lives and/or for a longer period of time.
To understand how the benefits vary according to the payment option you select, return to Pat's example (find this in the section on Pension Plan basics).
As explained earlier, Pat retires at age 60 with a basic pension benefit of $2698 each month payable as a Basic annuity (5-year certain and life). The monthly amount Pat would receive if she elected one of the other annuity payment options is shown in the following table. This example assumes that Pat's husband is the joint annuitant for the QJSA or any joint annuity she selects, and that he is also age 60 when Pat's pension benefit commences.
Pat's Basic annuity (5-year certain and life) = $2698 each month
|If Pat elects...||Her monthly benefit would be ...|
|10-year certain||$ 2,649|
|15-year certain||$ 2,582|
|20-year certain||$ 2,506|
|Qualified Joint and Survivor Annuity||$ 2,571|
|Joint Annuity — 1%||$ 2,685|
|Joint Annuity — 25%||$ 2,627|
|Joint Annuity — 50%||$ 2,555|
|Joint Annuity — 75%||$ 2,501|
|Joint Annuity — 100%||$ 2,441|
There are several ways to obtain a pension estimate. Refer to Retirement Process Steps – Step 5 in the Retirement Guide section on Employee Connect, the Human Resources Intranet Site that can be accessed at work by employees; for additional information access the ExxonMobil Benefits Service Center (EMBSC) Web site or call 1-800-682-2847.
Tax treatment of pension payments
Pension benefits are generally taxable as ordinary income for federal income tax purposes. Many states also tax pension benefits. Before you begin your pension benefit, you should consult a personal tax advisor for more help.
If you are eligible for and elect to receive a lump sum payment, the taxable amount may be subject to special tax treatment and may be eligible to be rolled over to an Individual Retirement Account (IRA) or another tax-qualified employer plan. Employees who retire on or after December 1, 2015 are able to roll over their lump sum payment into the ExxonMobil Savings Plan. The taxable amount is the total lump sum value less amounts on which tax has been previously paid.
Financial Fitness Program
Employees have access to Ernst & Young (EY) certified financial planners available on the EY Financial Planner Line® for the first 5 years of retirement. For additional information and registration, please access the intranet or www.exxonmobilfamily.com