Navigating the JNJ Pension Plan

The first step in maximizing your pension benefits is to fully understand how your plan works. JNJ offers two distinct types of pension plans: the Final Average Pay (FAP) and the Retirement Value Pension (RVP).

• Eligibility: Available to those hired before December 31, 2014.
• Vesting: Achieved after 5 years of service or at age 55.
• Status: This plan will be frozen as of January 1, 2026.
• Early Retirement: If you retire early—specifically, after age 55 with 10 years of service—your benefit will be reduced by 4% for each year before age 62.
• Distribution Options: This plan does not offer a lump sum option; you must select a monthly payout.

Retirement Value Pension (RVP):

• Eligibility: Applicable to those hired after December 31, 2014.
• Vesting: Similar to FAP, vesting occurs after 5 years of service or at age 55.
• Status: This plan remains open.
• Early Retirement: Like the FAP, retiring early results in a 4% reduction in your benefit for each year before age 62 if you meet the service requirements.
• Distribution Options: Offers flexibility with both lump sum and annuity options.

Benefit Calculation:

• Understanding how your pension is calculated is essential. For FAP, it’s typically based on your final average pay and years of service, while the RVP is influenced by contributions and investment performance.

Vesting Schedule:

• Your plan’s vesting schedule is crucial. If you leave JNJ before you’re fully vested, you could lose a portion—or all—of your pension benefits.

Early Retirement Options:

• Both FAP and RVP allow for early retirement, but be aware that opting to retire early will reduce your benefits. Specifically, there’s a 4% reduction for each year before age 62, provided you separate after age 55 with the required years of service.

Survivor Benefits:

• It’s important to review your options for survivor benefits. These benefits can provide for your spouse or other beneficiaries after your passing but may reduce your monthly pension amount. Weighing your family’s needs is key.

Consider Working Longer:

• The longer you stay with JNJ, the more your pension benefits can grow. This is particularly impactful for defined benefit plans like FAP, where additional years of service translate into a higher retirement income.

Consider Your Retirement Age:

• If possible, aim to retire at or after the plan’s normal retirement age. This ensures you receive full benefits, as early retirement can significantly reduce your monthly pension.

Coordinate with Other Retirement Savings:

• Your pension is just one piece of the retirement puzzle. Integrating it with your other savings, like 401(k)s and IRAs, can create a comprehensive plan. A financial advisor can help you align all your retirement income sources.

Take Advantage of Survivor Benefits:

• Don’t overlook the survivor benefit options. While choosing this option might reduce your monthly pension, it can offer peace of mind by ensuring financial security for your loved ones.