Retirement Home

Pension: Retirement Plan

Did you know that many Fortune 500 companies no longer offer pensions—and instead, only offer 401(k) plans? PG&E still offers both.

Your pension is one of the most important sources of retirement income you’ll have. How much do you know about it?

  • If you take a monthly annuity, will the amount you get change after you start drawing your pension? For information, see Payment Options: Overview.
  • If you have the cash balance formula, do you have to take a monthly annuity? For information, see Cash Balance Formula
  • If you already have a retirement date in mind, you can estimate your pension by logging in to myPensionConnect.com. Go to Estimate My Pension Benefit.

For a summary of the steps you need to take to start your pension, download the Pension Quick Start Guide.

For details about your pension, download Your Pension Guide.

How it works

The pension plan is a defined benefit plan, meaning the benefit you receive is defined by a formula. The way your pension is calculated depends on the type of formula you have and your employment classification:

The final pay formula is for Union-represented employees hired before 2013 or who were hired in 2013 and who chose to continue participating in the final pay formula during a special, one-time election period in 2013.

The final average pay formula is for Management or A&T employees hired before 2013 or who were hired in 2013 and who chose to continue participating in the final average pay formula during a special, one-time election period in 2013.

The cash balance formula is for eligible employees hired on or after January 1, 2013, or who were hired before 2013 and elected the cash balance formula during a special, one-time election period in 2013.

You could have multiple formulas if you were hired before 2013 and you elected the cash balance formula in 2013.

You’ll receive a specified amount regardless of the investment performance of the underlying plan assets. That’s why pensions are considered guaranteed income. If you have the cash balance pension formula, the income from your pension is stated as a 401(k)-style account balance, even though you’re guaranteed a pension benefit.

The good news is that because the amount of your pension is guaranteed, it won’t change. You can rely on that amount for budgeting.

The bad news is that because the amount of your pension is guaranteed, it won’t change. You won’t get a cost-of-living inflation adjustment.

IMPORTANT: Elect your pre-retirement beneficiary TODAY

Be sure your pre-retirement beneficiary designations are up to date in case you die before starting your pension.

Log in to your PG&E PensionConnect account: myPensionConnect.com
OR
Call the PG&E Pension Service Center at 1-800-700-0057

KEY FEATURES

Here’s a snapshot of PG&E’s pension plan (Retirement Plan).

Eligibility

Union-represented and Management and A&T employees are eligible for the Retirement Plan.

Ineligible employees include Hiring Hall, Temporary Additional, Outage, Intermittent, contract employees and leased employees. For details, see your Summary of Benefits Handbook at spd.mypgebenefits.com.

Participation

Participation in the Retirement Plan is automatic; you don’t need to enroll.

You generally start participating—and earning a pension benefit—on the first day of employment.

Contributions

PG&E pays the full cost of your pension. You do not make contributions to the plan.

Benefits

The way your pension is calculated depends on the type of formula you have and your employment classification.

Employees hired before 2013 may have the final pay formula (Union-represented) or final average pay formula (Management or A&T)—or a combination of the final pay or final average pay formula and the cash balance formula.

All employees hired in 2013 and later have the cash balance formula.

Vesting

If you have the final pay or final average pay or final average pay pension formula, you’re vested after five years of service or age 55 while an employee.

If you have the cash balance pension formula, you’re vested after three years of service or age 55 while an employee.

If you were hired before 2013 and you have a frozen final pay or final average pay pension benefit because you elected the cash balance formula, your frozen final pay or final average pay pension benefit will be vested after three years of service, too, even though it normally vests in five years.

Changing Your Pension Elections

Once you submit your correctly completed pension election kit, your elections are irrevocable. You can’t change your:

  • Form of payment
  • Pension beneficiary
  • Pension start date

If you want to change your form of payment, pension beneficiary or pension start date after you submit your kit and before your pension starts, you’ll need to cancel your original pension request and start over with a new pension request and new paperwork, including new notarized forms. Once your pension starts, you can’t change your elections or cancel your pension.

WHEN CAN YOU RETIRE

You can retire when you’re at least age 55. You’ll be considered a PG&E retiree if you end your PG&E employment at age 55 or older—even if you don’t start your pension.

Your retirement date and pension start date are usually the same:

Retirement date Pension start date
Also called Pension Commencement Date

The first day after you end PG&E employment if you’re age 55 or older

Your retirement date can be any day of the month.

The date from which your pension payments will be calculated

Your pension start date is always the first of the month.

The earliest possible pension payment will be made the second month following your pension start date, and will include your first and second months’ payment.*

EXAMPLE:
April 19: Last day worked
April 20: Retirement date
May 1: Pension start date
June 1: First pension payment (includes payments for May and June)

*Cash balance participants who elect a lump sum will receive a one-time benefit as early as the second month following their pension start date, depending when their correctly completed pension kit is received.

To start the retirement process, you'll need to follow the steps in this flyer.

FINAL PAY FORMULA

For Union-represented employees hired before 2013

You accrue a pension benefit based primarily on your final pay rate, age and years of service.

If you received Sunday, Shift or Nuclear premiums, your pension benefit will include an Additional Retirement Income (ARI) adjustment.

Final Pay Formula

Want an estimate of your pension?
Your pension formula is built in to the Pension Estimator at PG&E PensionConnect. Log in to myPensionConnect.com and click on Estimate My Pension Benefit.

NOTE: There are no automatic payment increases.
Unlike Social Security retirement income, your monthly pension payment doesn’t have an automatic cost of living adjustment. Be sure to plan for the impact of inflation on your fixed monthly pension payment.

FINAL AVERAGE PAY FORMULA

For Management and A&T employees hired before 2013

You accrue a pension benefit based on your final 36 months of pay, age and years of service.

Final Average Pay Formula

Want an estimate of your pension?
Your pension formula is built in to the Pension Estimator at PG&E PensionConnect. Log in to myPensionConnect.com and click on Estimate My Pension Benefit.

NOTE: There are no automatic payment increases.
Unlike Social Security retirement income, your monthly pension payment doesn’t have an automatic cost of living adjustment. Be sure to plan for the impact of inflation on your fixed monthly pension payment.

CASH BALANCE FORMULA

All eligible employees hired 2013 or later (Or employees hired before 2013 that chose the cash balance formula)

The cash balance formula lets your pension benefit accumulate for each year you work in a pension-eligible position—not just at the end of your employment.

You accrue annual pay credits based on full years of age and full years of credited service—plus, your account is credited with interest on the last day of each calendar quarter.

Annual pay credits
Annual pay credits are based on a point system of full years of age and full years of credited service as of December 31 each year:

Cash Balance Annual Pay Credits

Quarterly interest credits
Quarterly interest credits* are credited to your account on the last day of each calendar quarter.

The quarterly interest rate is based on the average 30-year Treasury rate for the preceding quarter, divided by four to determine the quarterly equivalent of the average annual yield.

Cash Balance Example

IF YOU HAVE MULTIPLE FORMULAS

Did you choose the cash balance formula during the pension choice period in 2013? You’ll have:

A final pay or final average pay pension based on your service through December 31, 2013 (using the final pay or final average pay formula that applies to you) + A cash balance pension for your service starting January 1, 2014

You can start your different pension benefits at the same time or separately, and you can make the same or different payment option and joint pensioner elections for the different pension benefits.

RETIRING EARLY?

The younger you are when you retire, the more your benefit may be reduced to reflect what’s likely to be a longer retirement period.

Retiring Early

To see the early retirement reduction factors for the final pay and final average pay formulas, click on the Summary of Benefits Handbooks for Management and A&T employees and for Union-represented employees.

POSTPONING PENSION PAYMENTS?

Planning a new career after you retire? Have a new job lined up?

Generally, if you’re under age 72, you can defer your pension until you’re ready for pension payments. You’re not required to start your pension to receive retiree medical coverage, and you’re not required to elect retiree medical coverage to receive pension payments. If you leave PG&E at age 55 or older and you postpone pension payments, you’ll still be considered a retiree for all your other retirement benefits.

If you’re retiring early and you defer the start of your pension, your benefit may increase.

How to defer your pension

There are two ways you can defer your pension:

Simply don’t return your signed and notarized pension election form. Your pension will be deferred.
OR
Check the Postpone Payment box below the list of Benefit Options and return Form 1. Do not check a Benefit Option.

Either way, your pension will not start. If you die before your pension starts, your pre-retirement primary pension beneficiary will get a benefit. Be sure your pre-retirement beneficiary designations are up to date.

Final pay or final average pay formula

Any early retirement reduction will decrease for every month that you defer the start of your pension—until you qualify for an unreduced pension. The later you start your pension, the smaller the reduction for early retirement.

Deferred Pension Table

To find out when your pension will be free from an early retirement reduction, contact the PG&E Pension Service Center at 1-800-700-0057.

Cash balance formula

If you want to defer your cash balance benefit, you can keep it with the PG&E Retirement Plan to continue earning interest until you want to receive payments. Or, you can take a lump-sum distribution and roll it into another employer’s retirement plan or an IRA to avoid potential immediate taxes or IRS early withdrawal penalties.

REQUIRED MINIMUM DISTRIBUTIONS

Generally, you’ll need to start taking your pension at age 72 (earlier if your 70th birthday was before July 1, 2019, according to the IRS rules in effect before December 20, 2019). The IRS requires minimum distributions from tax-protected retirement accounts to make sure it can eventually collect income tax on the money that’s sitting in those accounts.

Large penalties apply if you don’t take your required minimum distribution by the deadline that applies to you. The IRS penalty is 50% of the amount you should have taken out. Contact your tax accountant or financial advisor for specific guidance.

PAYMENT OPTIONS: OVERVIEW

One of your biggest decisions will be how you want your pension to be paid.

The cash balance formula is the only formula that allows you to elect a lump-sum payout. You can be single or married to elect this option. If you’re married, you will need your spouse’s notarized consent.

All of the pension formulas allow the following monthly annuities. You can be single or married to elect any of these options.

Payment Options

Married?

Federal law requires that your spouse be paid at least a joint pension of 50% or a special joint pension (“pop-up”) of 75% or 100% unless you and your spouse elect otherwise. For purposes of the Retirement Plan, your spouse is the person to whom you’re legally married. Your domestic partner is not considered a spouse—but you can name anyone as a pension beneficiary (also called a joint pensioner), including a domestic partner.

Your spouse will need to provide notarized consent if you choose:

  • A 25% joint pension with your spouse
  • A 25% or 50% special joint pension (“pop-up”) with your spouse
  • Any joint pension percentage with someone other than your spouse
  • A single life pension
  • A lump sum

Pension beneficiary

Your pension beneficiary (also called a joint pensioner) can be any one person you choose to receive a joint pension for the rest of their lifetime after your death. This person doesn’t have to be your spouse—but if you’re married and you choose someone other than your spouse to be your pension beneficiary, your spouse will need to provide notarized consent.

You can’t change your pension beneficiary. The person you designate as your pension beneficiary will be the only person to receive the joint survivor’s benefit when you die. You won’t be able to designate a different pension beneficiary to receive your survivor’s benefit—and you won’t be able to remove the pension beneficiary you elect. This rule applies even if:

  • You later divorce or sever ties with your pension beneficiary
  • You later marry a new spouse
  • Your pension beneficiary dies
PAYMENT OPTIONS: SINGLE LIFE PENSION

This option pays you a monthly benefit for your lifetime, and stops the first of the month after your death. No payment will be made to any other person after your death.

If you elect this option, you won’t be able to change your election even if you later marry or want to add a pension beneficiary other than your spouse.

Married?

Federal law requires that your spouse be paid at least a joint pension of 50% unless you and your spouse elect otherwise. Your spouse will have to provide notarized consent if you choose the single life pension.

PAYMENT OPTIONS: JOINT PENSION

This option pays you a reduced monthly benefit (compared to a single life pension) for your lifetime. The benefit is reduced by an actuarial factor based on your age and the age of your pension beneficiary on your pension start date.

After you die it pays a further benefit to any one person you choose for the rest of their lifetime. Your basic monthly pension benefit will be reduced to reflect the additional value of this option to your pension beneficiary.

Joint Pension

Your percentage options may be limited if your pension beneficiary isn’t your spouse and is more than 10 years younger than you are.

If your pension beneficiary dies before you do, your benefit will continue as the reduced monthly pension payment for your lifetime. No payment will be made to anyone after your death.

Married?

Federal law requires that your spouse be paid at least a joint pension of 50% unless you and your spouse elect otherwise. Your spouse will have to provide notarized consent if you choose any other option.

PAYMENT OPTIONS: SPECIAL JOINT PENSION (“POP-UP”)

This option pays you a reduced monthly benefit (compared to a single life pension and joint pension) for your lifetime—plus, after your death, it pays a further benefit to any one person you choose for the rest of their lifetime.

Special Joint Pension

If your pension beneficiary dies before you do, your benefit will increase or “pop up” to the original single life pension benefit—as if you had never elected a joint pension. This increased benefit typically will be payable for your lifetime, but no payments will be made to anyone after your death.

EXAMPLE: If your special joint pension (“pop-up”) is $2,800 per month and you elect a 50% special joint pension (“pop-up”)—after your pension beneficiary’s death, you will receive a single joint pension of $3,000 per month for life. See Sample Final Pay Monthly Payments for sample monthly payments of this and other forms of pension payments.

Your basic monthly pension benefit will be reduced by more than it would for the joint pension. That’s because this option offers greater value to you if your pension beneficiary dies first. If you die first, your pension beneficiary’s monthly benefit won’t increase beyond the percentage you elect.

How to initiate the “pop-up” benefit

If your pension beneficiary dies before you do, contact the PG&E Pension Service Center at 1-800-700-0057. They’ll explain how to initiate the “pop-up” benefit and where to send the certified copy of your pension beneficiary’s death certificate.

Married?

Federal law requires that your spouse be paid at least a joint pension of 50% or a special joint pension (“pop-up”) of 75% or 100% unless you and your spouse elect otherwise. Your spouse will have to provide notarized consent if you choose any other option.

PAYMENT OPTIONS: LUMP SUMS

Pensions valued at $5,000 or less

If the present value of your pension is $5,000 or less, your pension will be paid as a lump sum, regardless of your pension formula. You can elect a lump-sum rollover or take a lump-sum cash payout.

If you don’t provide completed paperwork to the PG&E Pension Service Center within 60 days of receiving your pension kit, the lump sum will be automatically rolled over or cashed out, depending on the present value of your pension.

Lump Sums

Pensions valued at more than $5,000

The only way you can elect a lump sum for pensions with a present value of more than $5,000 is if you have the cash balance formula.

You can roll your lump sum into another employer’s retirement plan or an individual retirement account (IRA)—or you can take cash.

NOTE: Income taxes and early withdrawal penalties may apply to cash distributions. Consult your tax accountant or financial advisor for specific guidance.

Married?

Federal law requires that your spouse be paid at least a joint pension of 50% unless you and your spouse elect otherwise. Your spouse will have to provide notarized consent if you take a lump sum.

PAYMENT OPTIONS: SAMPLE FINAL PAY MONTHLY PAYMENTS

Here are sample monthly payments for a final pay pension formula, showing the different amounts based on payment options. These are examples only.

Sample payments

*Compared to single life pension value

DIRECT ROLLOVER REQUIREMENTS

If you elect a direct rollover, you’ll get a check mailed to you. You’ll be responsible for delivering the payment to the applicable employer plan or individual retirement account (IRA).

Federal and state income taxes do not need to be withheld from direct rollover distributions because the distribution is going directly into another employer’s retirement plan or IRA.

To make a direct rollover, you’ll need to provide two things:

The name of the institution acting as your IRA or qualified plan administrator
AND
Your account number with the institution

If you don’t provide this information when you elect a direct rollover, the PG&E Pension Service Center will return your pension election form to you—and this could delay the start of your pension.

IMPORTANT! You’re responsible for making sure the plan you choose to receive your rollover will accept funds from a defined benefit pension plan.

You have 60 days from the date on your rollover check to deliver the check to your new plan administrator. If you’re late, you may have to pay taxes and penalties on the rollover amount.

60-day rollovers (indirect rollovers)

If your lump sum is paid to you instead of in a direct rollover distribution, you still have 60 days to roll over your lump-sum distribution indirectly to another employer’s retirement plan or IRA.

Generally, if you don’t do a direct rollover, the pension plan is required to withhold 20% of the payment for federal income taxes. This means that, in order to roll over the entire payment in a 60-day rollover, you must use other funds to make up the 20% withheld.

If you don’t roll over the entire amount of the payment, the portion not rolled over will be taxed and will be subject to the 10% additional income tax on early distributions if you’re under age 59-1/2 (unless an exception applies). Consult your tax accountant or financial advisor for specific guidance.

RESOURCES

PG&E PensionConnect

PG&E PensionConnect is a secure way to access your pension benefit information anytime, anywhere—from any computer or mobile device:

  1. Go to myPensionConnect.com
  2. Enter your username and password

    First-time users will have to register and create a new username and password. You’ll be asked to enter your Social Security number or your Pension Personnel ID Number (PERNR) for verification before you can create a profile. You can find your PERNR on your pension pay statement.

    IMPORTANT! You’ll need to register with your PERNR after your retirement date—even if you recently used the PG&E Pension Service Center as an active employee. You can’t register as a retiree until after you retire.

  3. Review your personal homepage. This is where you can:
    • Estimate your pension before you start your pension
    • View your pension payments after your pension starts
    • Change your tax withholding elections
    • Adjust your payment delivery method
    • Update your bank account information
    • Request an income verification letter
    • Update your address
    • Confirm your preferred method for communication delivery
    • Read the Retiree News—current and past 12 months are available

PensionConnect

PG&E Pension Service Center

Call 1-800-700-0057 for help with:

  • Pension paperwork
  • Pension payments
  • Survivor benefits
  • Direct deposit changes
  • Tax withholding changes

Representatives are available Monday–Friday except holidays, 7:30 a.m.–5 p.m. Pacific time (voicemail is available after hours).

PG&E QDRO Team

Get help with divorce documentation:
Email WTWQDRO@willistowerswatson.com or call 1-800-700-0057.