An overview of PG&E’s retirement benefits
PG&E offers four benefit plans that help provide for your financial security after your retirement:
- The Pacific Gas and Electric Company Retirement Plan (the “Retirement Plan,” or “pension”)
- The PG&E Corporation Retirement Savings Plan (the “Retirement Savings Plan”, or “401(k)”)
- The Pacific Gas and Electric Company Health Care Plan for Retirees and Surviving Dependents (or “retiree medical”)
- The Pacific Gas and Electric Company Postretirement Life Insurance Plan (or “retiree life insurance”)
PG&E also makes contributions toward your future Social Security retirement benefits. These contributions are in addition to the deductions for Social Security taxes taken out of your paycheck.
You should plan carefully for your financial security after you retire. In addition to Social Security and your PG&E-sponsored retirement benefits, your own savings are a vital component in ensuring a comfortable lifestyle after you retire. It’s a good idea to consult with a financial planner to develop your personal retirement plan.
About the Retirement Plan (Pension)
Once your benefit is vested, the Retirement Plan will pay you a fixed pension benefit after you stop working for PG&E.
The Retirement Plan has two benefit formulas:
- A final pay formula; and
- A cash balance formula.
To find out more about the pension benefit formulas, vesting requirements and other important information, see the Retirement Plan section of your Summary of Benefits Handbook or log on to the PG&E Pension Center website.
About the Retirement Savings Plan (401(k))
The Retirement Savings Plan provides you a way to save for retirement through your own contributions plus company matching contributions. Your company match amount depends on the pension formula that applies to you, and whether you’re in a union-represented position. The retirement income you can receive from the 401(k) varies with the amount of personal and company contributions made to the plan, as well as investment returns on these contributions.
The 401(k) offers two company matching benefits, depending on which pension formula applies to you.
- If you’re participating in the final pay formula:
- A company match of $0.75 per dollar on your contributions of up to 6% of pay (for Management/A&T employees); or
- A company match of $0.60 per dollar on your contributions of up to 3% or 6% of pay, depending on years of service (for union-represented employees).
- If you’re participating in the cash balance formula, a company match of $0.75 per dollar on your contributions of up to 8% of pay.
To find out more about your Retirement Savings Plan benefits, please see your Summary of Benefits Handbook, or log on to your NetBenefits account.
The Health Care Plan for Retirees and Surviving Dependents provides medical, mental health/substance abuse treatment and prescription drug coverage for eligible retirees and their families.
At retirement, PG&E will provide you with a Retiree Medical Savings Account (RMSA) to help you pay retiree medical premiums. If you have remaining credits in your Health Account when you retire, you can continue to use your Health Account to pay for eligible retiree medical expenses.
About Retiree Life Insurance
The Postretirement Life Insurance Plan provides retirees with a specific amount of life insurance coverage. This coverage is provided by PG&E at no cost to you.
Generally, your participation in the Retirement Plan begins on your first day with PG&E or any participating employer; there’s no waiting period to begin earning a benefit.
Certain types of employees—such as contract, agency, hiring hall and outage employees—aren’t eligible to participate in the pension. See your Summary of Benefits Handbook for exclusions. If you transfer from an ineligible classification to an eligible classification, you’ll start participating in the pension on your first day in the new position.
You don’t make contributions to the pension; PG&E funds this benefit for you.
When you vest in your pension, you have a right to receive a future benefit after your employment ends. You’ll be vested once you reach the earliest of:
- Three years of credited service (if you have a benefit under the cash balance formula);
- Five years of credited service (if you only have a benefit under the final pay formula); or
- Age 55.
How the Final Pay Pension Formula Works
The final pay formula applies to PG&E employees who were participants in the pension before January 1, 2013.
Under the final pay formula, your pension is calculated as:
- For Management/A&T employees: 1.7% x your final 36-month average salary x your years of credited service; or
- For union-represented employees: (1.5% x up to 25 years of credited service + 1.6% x your years of credited service over 25) x monthly equivalent of your base pay rate 30 days before you terminate employment.
You can start your final pay pension payments after you stop working for PG&E and once you’re at least age 55. This benefit is payable as a fixed monthly amount for your own lifetime only, or—if you elect a joint pension at retirement—for your lifetime and your spouse’s or beneficiary’s lifetime after you die. Your monthly benefit will be reduced for early retirement if you start your pension before age 65, unless you have enough credited service to qualify for an unreduced pension (35 years of service for Management/A&T employees, and 30 years of service for union-represented employees).
Employees who elect to participate in the cash balance formula during the one-time pension choice period in 2013 stop earning benefits under the final pay formula when the cash balance formula becomes effective (usually January 1, 2014). The frozen final pay benefit is based on pay and service as of December 31, 2013—or the day before cash balance benefits begin—and is payable after you reach age 55.
How the Cash Balance Pension Formula Works
The cash balance formula applies to eligible PG&E employees hired or rehired on or after January 1, 2013, and employees hired before 2013 who elect the cash balance formula during the one-time pension choice period.
Under the cash balance formula, your pension benefit consists of annual pay credits between 5% and 10% of pay (based on age and service), plus quarterly interest accumulated in your cash balance account over time.
When your employment ends, you’ll have the option to elect:
- A single lump-sum payment of your cash balance account, or
- A fixed monthly payment for your own lifetime only, or
- A joint pension for your lifetime and your spouse’s or beneficiary’s lifetime after you die.
If you elect monthly payments, the benefit may be reduced to reflect your age and the age of your joint pensioner when payments begin. There is no reduction for early retirement if you elect a lump sum, but you must pay income taxes—and possible early withdrawal tax penalties—unless you roll over your lump sum into an Individual Retirement Account (IRA) or another employer’s retirement plan.
Providing benefits to a surviving spouse or beneficiary
The Retirement Plan may provide a pension benefit for your surviving spouse or a beneficiary after you die.
If you die before you retire, your spouse or registered domestic partner is your beneficiary automatically. If you’re not married—or if you’re married and want to name someone else as your beneficiary—you must complete a Pre-Retirement Beneficiary Designation Form for your pension to be paid to another person after your death. Your surviving spouse or beneficiary would receive a 50 percent joint pension under the final pay pension, or the value of your vested cash balance account or monthly pension benefit equivalent under the cash balance pension.
At retirement, you can elect monthly pension benefits for your lifetime only or a reduced joint pension benefit for your lifetime and your spouse’s or other beneficiary’s lifetime after you die. This option is available under both the final pay and cash balance pension. If you elect a joint pension, the percentage of your benefit that you chose at retirement will be paid to your spouse or beneficiary for his or her lifetime after your death. If you elect to take your pension for your own lifetime only, your pension will stop when you die.
If you elect to receive your cash balance account in a single lump-sum payment at retirement or termination, there will be no pension payment to anyone after you die.
For details on survivor benefits, see the “Payment Options” and “If You Die Before You Retire” sections of the appropriate pension formula in your Summary of Benefits Handbook.
When you’re ready to start your pension payments
You must request a retirement package at least 90 days before the date you want your pension to start, and your completed paperwork must be received by PG&E at least 30 days before your payments can begin. If you have questions about initiating your retirement, send an email to HRBenefitsQuestions@exchange.pge.com or call 415‑973‑4357 (toll-free 800‑788‑2363).
Be sure to notify your supervisor of your retirement date so your final paycheck will be processed in a timely manner. Note that there are special instructions for submitting your retirement paperwork if you’re divorced.