Your retirement income is crucial, and the AbbVie Pension Plan serves as an important part. While Social Security benefits are designed to supplement this pension, knowing how and when to take this pension can play a huge part in making sure you get the most income during retirement. Thankfully, there are options for your surviving spouse to receive the same or reduced benefit as you should you pass away first. But it doesn’t take a lifetime of service to receive a pension from AbbVie – just five years of eligible employment history should see you receiving a benefit.
Eligibility and Participation
The AbbVie Pension Plan covers eligible employees of AbbVie or participating AbbVie subsidiaries. For most employees to become vested in the pension plan, you’ll need to be employed for five years.
Plan Status
If you’re just looking to start working at AbbVie, I have some bad news: The plan ceased accepting new participants starting from January 1, 2022. If you weren't part of the plan by December 31, 2021, you won't be able to join afterward, with some exceptions. The plan split benefits in 2022, allowing current participants to keep accumulating their benefits, or freeze their pension and accept higher company contributions to their 401(k).
Contributions and Funding
There is no contribution on your part needed for the AbbVie Pension Plan. The plan's benefits are funded through a trust, which AbbVie funds.
Calculating Your Benefits
When you retire or leave the company, your AbbVie Pension Plan benefits are calculated using formulas that factor in elements like your Eligible Service, Final Earnings, and Age. Your pension benefit will be determined based on your service before and after December 31, 2003.
Annuity Formula for Service Earned January 1, 2004, and Later
1.10% of your FAP multiplied by your years of Benefit Service from or after January 1, 2004, up to 35 years.
Example: You worked at AbbVie for 25 years and earned $250,000 each year in your last five years. Your benefit is as follows:
1.1% X $250,000 x 25 = $68,750.
Understanding Earnings
For the AbbVie Pension Plan, Basic Earnings encompass several components of your compensation, including regular base pay, overtime, shift differential, premium payments, commissions, sick pay, and certain bonus plans, before pre-tax benefit plan contributions.
However, certain types of income, such as discretionary bonuses, deferred compensation, special awards, and other forms of earnings, are not considered as Basic Earnings. It's important to note that there's a federal limit to the maximum Basic Earnings recognized by the plan each year, which is $330,000 in 2023.
In cases where your Basic Earnings surpass the maximum allowable limit, AbbVie might provide supplemental payments through the AbbVie Supplemental Pension Plan to ensure you receive monthly pension benefits equivalent to what you would have received without these limits.
Your Final Earnings, also known as Final Average Pay (FAP), are calculated by averaging your highest-paid consecutive 60 calendar months of Basic Earnings received from AbbVie. If your Basic Earnings span less than 60 months, your Final Earnings will be the average for the entire period you earned Basic Earnings.
In summary, your AbbVie Pension Plan offers a steady source of retirement income, complemented by Social Security benefits and opportunities for additional financial security through the AbbVie Savings Plan and personal savings. By understanding the eligibility, benefits, and calculations involved, you can take confident steps toward securing a fulfilling retirement.