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 Hired in 2013 or Later? Have the Cash Balance Pension?
  • If you already have a retirement date in mind, do you know how to use the Pension Estimator to see how much your pension benefit might be? You’ll be automatically logged in to the tool when you go to PG&E@Work for Me > About Me > My Retirement > Welcome > PG&E Pension Center > At Your Fingertips > Pension Estimator.

How it works

The pension plan is a defined benefit plan, meaning the benefit you receive is defined by a formula. This is true for both the final pay formula and the cash balance formula.

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

No one likes to think about it—but what happens to your pension if you die before you retire?

Don’t risk letting your vested pension benefit disappear into thin air. Fill out a Pre-Retirement Beneficiary Designation Form to provide a pension benefit to your beneficiary in case you die before you retire. Just fill it in and mail it back to the address on the form. Your election will be effective on the date the PG&E Pension Center receives your correctly completed form.

You can name your spouse or another primary beneficiary—and as many contingent beneficiaries as you like. If you’re naming someone other than your spouse, you’ll need your spouse’s written, notarized consent. You don’t have to be married to name a beneficiary—it can be any person. However, only one person will be entitled to the benefit.

If you’re vested, your primary beneficiary will receive a benefit equal to 50% of the basic pension you would have received had you elected retirement as of the first day of the month after your death. To find out how and when the benefit will be paid, see your Summary of Benefits Handbook at spd.mypgebenefits.com:

  • Go to Retirement Benefits.
  • Click on Final Average Pay Benefit or Cash Balance Benefit.
  • In the left column, click on What Happens . . . > If You Die Before You Retire.

If you’re married and you don’t submit a Pre-Retirement Beneficiary Designation Form—and you die before retiring—your spouse would get this benefit. If you’re not married—or if both you and your spouse die at the same time before you retire—then no benefit would be paid to any individual or to your estate. You must have designated an individual for that person to be entitled to this benefit.

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—or a combination of the final 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 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 pension benefit because you elected the cash balance benefit, your frozen final pay pension benefit will be vested after three years of service, too, even though it normally vests in five years.

Changing Your Benefit

You can’t change any of your pension elections for any reason after your pension start date. Your pension payments can’t be stopped or suspended even if you’re rehired or reinstated by PG&E, unless there is a legal reason requiring a hold on your pension benefit.

You can only change your pension payment option if you do so 30 or more days before your pension start date. If you have fewer than 30 days before your pension start date, you can’t change your pension elections unless you cancel your pension start date entirely.

WHEN CAN YOU RETIRE

You can retire when you’re at least age 55. You’ll be considered a PG&E retiree from the first of the month after you terminate PG&E employment, even if you haven’t submitted your pension paperwork.

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

Retirement date Pension start date

First of the month after you terminate PG&E employment if you’re 55 or older

To qualify for retirement on your last day of employment, you may be:

  • Actively at work
  • On vacation
  • On a leave of absence, including Workers’ Compensation and Long-Term Disability leaves

First of the month when you begin receiving pension payments

Your first pension payment will be made in the second month following your pension start date, and will include your first and second month’s payment.*

EXAMPLE:
May 1: Pension start date
June 1: First pension payment—including the benefit for May and June combined

*Are you a cash balance participant electing a lump sum? You’ll receive your one-time benefit after the PG&E Pension Center receives your timely, complete paperwork—typically the first of the month after your retirement date. If your paperwork is late, incomplete or incorrect, your payment will be delayed.

Pension Steps

Download Retirement Steps for a timeline and checklist of what you need to do by when.

HIRED BEFORE 2013? HAVE THE FINAL PAY FORMULA?

If you were hired before 2013, you have the final pay pension formula. This formula is based on your final pay and your years of service.

Union-represented employees hired before 2013

Pension Calculations

*Your “basic weekly pay” is equal to your straight-time hourly rate of pay for the basic work week as of the 30th day before your retirement or termination—not including any temporary upgrade pay, or premium pay, or any benefits of any kind—multiplied by 2,080 hours, divided by 52 weeks, and then rounded up to the nearest $10.

  • Confused? Your pension formula is built in to the Pension Estimator. You can calculate your estimated monthly benefit with the PG&E Pension Estimator tool at the online PG&E Pension Center. You’ll be automatically logged in to the tool when you go to PG&E@Work for Me > About Me > My Retirement > Welcome > PG&E Pension Center > At Your Fingertips > Pension Estimator.

Management and A&T employees hired before 2013

Pension calculation 36-month

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.

With the final pay formula, if you start to receive your monthly pension payments before age 65, your benefit may be reduced.

Any reductions in your monthly pension benefit will be based on your years of credited service and your age when your pension payments begin. The final pay formula’s early retirement reduction factors are calculated using bands of service years, as described in the Summary of Benefits Handbooks for Management and A&T employees and for Union-represented employees.

Delaying your pension?

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

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 your pension. If you delay your pension, you’ll still be considered a retiree for all your other retirement benefits.

If you’re retiring early and you delay your pension, your benefit may increase. Any early retirement reduction will decrease for every month that you delay the start of your monthly pension payments—until you qualify for an unreduced pension. The later you start your pension payments, the smaller the reduction for early retirement.

To find out when your pension benefit will be free from an early retirement reduction, contact the PG&E Pension Call Center at 1-800-700-0057. Representatives are available Monday–Friday except holidays, 7:30 a.m.–3:30 p.m. Pacific time. You can also email the PG&E Pension Call Center: HRPensionQuestions@pge.com.

Delayed pension chart
HIRED IN 2013 OR LATER? HAVE THE CASH BALANCE FORMULA?

If you were hired in 2013 or later—or if you were hired before 2013 and you chose the cash balance formula—your pension will be calculated with 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:

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.

Example

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.

With the cash balance formula, no matter how old you are when you leave PG&E, you can take your vested benefit as a single lump-sum payment or as a monthly annuity for life.

If you take your cash balance benefit as a lump sum, you can roll it into another retirement plan—like an IRA—to avoid potential immediate income taxes and IRS early withdrawal penalties.

If you take your cash balance benefit as an annuity, your account balance will be converted to a monthly benefit for life using IRS-based actuarial factors that take into account your age when you start receiving benefits.

Delaying your pension?

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

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 your pension. If you delay your pension, you’ll still be considered a retiree for all your other retirement benefits.

If you’re retiring early and you delay your pension, your benefit may increase.

If you want to delay 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 retirement plan, like an IRA, to avoid potential immediate taxes or IRS early withdrawal penalties.

HAVE BOTH FORMULAS?

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

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

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

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.

Both the final pay formula and the cash balance formula allow the following monthly annuities. You can be single or married to elect any of these options.

Overview

Married?

Your spouse will need to provide notarized consent to most options. The only options that don’t require your spouse’s notarized consent are:

  • A regular joint pension of 50% or greater with your spouse
  • A special joint pension of 75% or greater with your spouse

Joint pensioners

Your joint pensioner can be any person you choose to receive a joint pension for his or her 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 joint pensioner, your spouse will need to provide notarized consent.

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

  • You later divorce or sever ties with your joint pensioner
  • You later marry a new spouse
  • Your joint pensioner 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 joint pensioner.

Married?

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

PAYMENT OPTIONS: REGULAR 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 joint pensioner on your pension start date.

After you die it pays a further benefit to any one person you choose for his or her lifetime. Your basic monthly pension benefit will be reduced to reflect the additional value of this option to your joint pensioner.

Joint pension

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

If your joint pensioner 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 a 50% joint pension unless you and your spouse elect otherwise. Your spouse will have to provide notarized consent if you choose:

  • The 25% joint pension with your spouse
  • Any joint pension percentage with someone other than your spouse
  • A single life pension
PAYMENT OPTIONS: SPECIAL JOINT PENSION

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

Special joint pension

If your joint pensioner 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 effective on the first of the month following the death of your beneficiary, and will be payable for your lifetime. No payments will be made to anyone after your death.

EXAMPLE: If your special joint pension is $3,990.56 per month and you elect a 50% special joint pension—after your joint pensioner’s death, you will receive a single joint pension of $4,236.26 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 regular joint pension. That’s because this option offers greater value to you if your joint pensioner dies first. If you die first, your joint pensioner’s monthly benefit won’t increase beyond the percentage you elect.

How to initiate the pop-up benefit

If your joint pensioner dies before you do, contact the PG&E Pension Call 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 joint pensioner’s death certificate.

PG&E Pension Call Center representatives are available Monday–Friday except holidays, 7:30 a.m.–3:30 p.m. Pacific time. You can also email the PG&E Pension Call Center: HRPensionQuestions@pge.com

Married?

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

  • The 25% joint pension with your spouse
  • Any joint pension percentage with someone other than your spouse
  • A single life pension
PAYMENT OPTIONS: LUMP SUMS

You can elect a lump sum payment option only if you have the cash balance pension. You can’t elect a lump sum for final pay pensions.

Sometimes, lump sums are automatic—there’s no election allowed. This happens for small pensions.

Automatic lump sums

If the total value of your pension is less than $5,000, it will be paid as a lump sum automatically. It doesn’t matter if you have the final pay formula, the cash balance formula or a combination of the two formulas. Pensions totaling less than $5,000 will automatically be paid as a lump sum.

  • If the lump sum is more than $1,000, you can roll it into another retirement plan, like an IRA.
  • If the lump sum is $1,000 or less, you’ll get cash.

Elected lump sums

The only way you can elect a lump sum for pensions valued at $5,000 or more is if you have the cash balance formula. You can roll your lump sum into another retirement plan, like an IRA.

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

LEAVING PG&E? HOW TO MAKE A DIRECT ROLLOVER OUT OF YOUR PENSION

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

Rollover requirements

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

If you elect a rollover and your plan can’t accept it, you should contact the PG&E Pension Call Center right away and ask them to reissue the check directly to an institution that can accept your rollover. Otherwise, 20% federal income tax will be automatically withheld from your check, and you’ll get a 1099 at the end of the year. You may have to pay additional taxes and penalties on the rollover amount.

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.

Important
RESOURCES
I need to. . . Log in to the online PG&E Pension Center: PG&E Payroll Service Center:
415-973-3767, option 2*
PG&E Pension Call Center:
1-800-700-0057**

Change my direct deposit information:

  • Stop getting direct deposits and request paper checks
  • Start direct deposits or change your banking information

Select Pension payment summary in the At your fingertips section on the right side of the home page.

Click the Update button in the Payment method & institution section.

Select Continue and provide the requested account information.

Yes Yes
Change my tax withholding

Select Pension payment summary in the At your fingertips section on the right side of the home page.

Click the Update button in the Withholding elections section.

Select Continue and make your elections.

Yes Yes
Talk to someone for help with my pension payments No No Yes
Change my address Yes No Yes
Learn about my pension benefits Yes No Yes

*PG&E Payroll Service Center representatives are available Monday–Friday 8 a.m.–4 p.m. Pacific time.

**PG&E Pension Call Center representatives are available Monday–Friday except holidays, 7:30 a.m.–3:30 p.m. Pacific time.

You can also email the PG&E Pension Call Center: HRPensionQuestions@pge.com.