Founded in 1916 by William Edward Boeing, Boeing Co. is an airline company that has works under commercial airline supply, defense, space and security, global services, and also works as a capital generation wing named Boeing Capital. With its CEO as David Calhoun, it is headquartered in Chicago, ILI, and has 58 offices across 25 countries around the globe. So, the question arises does America’s largest manufacturing exporter, with an employee count of 1, 41,000 provide retirement plans or pension benefits to its employees and workers? Does Boeing have a retirement/pension plan?
Does Boeing have a retirement plan?
The answer is YES, Boeing does provide a retirement plan to its retirees, and that too is a pretty good one. Currently, it is providing retirement benefits to around 5, 50,000 active employees and retirees. It recently indicated the intention to recognize significant pension-related addition to the equity that would be non-cash. This shows Boeing’s commitment to maintaining strong and secure pension funds for its employees who will, someday in the future become retirees.
A pension fund is made up of two distinct elements namely pension benefit obligations and pension assets. Pension benefits refer to the company’s obligation to provide benefits to the retirees and pension assets refer to capital available through which the obligations would be fulfilled. The company calculates both the elements every year. The pension obligations are said to be completely fulfilled when the pension assets exceed the pension obligations. Boeing has had a track record of spending a minimum of $2 billion on providing pensions to its retirees and beneficiaries.
Problems in the journey
But as we paint a rosy and perfect picture of the retirement benefits Boeing, as an employer, provides, it is necessary for me to also bring your attention to the fallbacks Boeing has faced in fulfilling its obligation towards its employees who rely on it for their post-work years.
Despite such an impeccable track record, Boeing Co. has seen some problems and setbacks in the last decade in its journey of providing one of the best benefits to its present and former employees.
– Boeing held pension assets worth $42.9 billion at the end of 2000 with benefit obligations of only $29.1 billion but by the end of 2001, benefit obligations rose to $32.7 billion but the pension assets dropped down to $32.7 billion.
Why did this happen? Why did the pension assets not grow with the pension obligation?
– The reason for the increase in benefit obligations was that naturally with time, the number of employees in a corporation increases, and also, the present employees of some time have now become retirees of the corporation. So, the increase in pension benefit obligations was natural. The company estimates its assets by the returns it gets from investing its money or capital in the market, the same market in which we all invest our money in some way or other. And we all know that the market has been giving negative returns for the past several years. Thus, the pension assets have recorded a decline and have fallen behind the increase that has happened in the pension benefit obligations.
How are the pension funds of Boeing protected?
The trust funds of Boeing are protected by being regulated in two ways. Firstly, they are regulated and managed separately according to US Government Regulations under the Employee Retirement Income Security Act of 1974. Laws are established by ERISA that regulate the corporate pension funds and help companies guarantee the benefits to employees once they retire.
So, the pension funds are more or less not affected by the change in the company’s power or major stakeholders. Secondly, there is a government agency called Pension Benefit Guaranty Corporation that backs up corporate pension funds. This agency helps companies in ensuring employee benefits even when there are insufficient funds for meeting the pension benefit obligations. Thus, with the help of the laws of ERISA and with the assistance of Pension Benefit Guaranty Corporation, Boeing can provide benefits to employees even in unfavorable circumstances.
Recent developments
Although the company has faced difficulty in fulfilling its obligations due to the fluctuations in the market it still has taken phenomenal steps to keep up with the needs of its employees.
- Boeing announced discretionary spending of $3 billion under pension contribution for employees in 2020.
- The pension assets were accounted to be $68.7 billion whereas, the benefit obligations totaled $82.4 billion.
- These statistics show a funding ratio of around 83.4% which is pretty good considering other corporate retirement plans.
Frequently asked questions
- Will you be eligible for the benefits if you apply for a layoff (involuntary/voluntary) or resignation?
No, you won’t be eligible for retirement benefits. Only the employees who complete their employment tenure and retire working as an employee in Boeing will be eligible for the retirement benefits
- Does the retirement plan comprise medical benefits?
Yes, the retirement plan provided to the employees of Boeing has medical benefits too.
