United Space Alliance Memo: CEO/COO Message: Retirement Plan Changes
From: USA Communications
Sent: Thursday, October 21, 2010 12:02 PM
To: ALL-EMPLOYEE; ALL-EMPLOYEE-USASO
Subject: EXTERNAL: CEO/COO Message: Retirement Plan Changes
Dear Colleagues,
As you know, United Space Alliance has been undergoing a significant transformation in order for the company to remain competitive and successful following the completion of Shuttle Program operations and the closeout of the Space Program Operations Contract (SPOC). Retirement plans like USA’s defined benefits plans are a significant cost driver, and many of USA’s competitors have eliminated such plans to drive their costs down.
After fully considering all options available, USA is announcing its intention to terminate all of its defined benefit plans, effective as of the close of this plan year. You will receive official notices via US Mail to your home. This memo is an explanatory “heads up” of what this means to you.
This impacts our represented employees also. In accordance with collective bargaining agreements with the International Association of Machinists and Aerospace Workers for Local Lodges 1786 and 2061, USA will stop contributing to the IAM National Pension Fund and the IAM Pension Fund 401k Plan with respect to hours worked and paychecks dated after December 31, 2010.
Termination of your plan will end all future benefit accruals attributable to service and compensation after the 2010 plan year end. By terminating the plans, all participants will be 100% vested in their earned retirement benefits and will not lose any of their earned retirement benefits.
Retirees already receiving benefits will continue to receive their monthly benefits. Participants who become eligible to retire and choose to do so during the termination process will receive their full retirement benefit in any form of payment now available under their plan. Employees who were hired after September 30, 2006, are not participants in these plans and are not eligible for pension benefits.
At the end of the termination process, all active eligible plan participants, all former vested plan participants not yet in pay status, all retirees who began receiving their pensions on or after December 31, 2008, will be given a choice between receiving their pension benefits in the form of an annuity or in a lump sum payment. This process does not affect the ability to otherwise become eligible for subsidized early retirement benefits that are available in some plans. This note provides only a brief summary of benefits. The Plan documents provide the governing provisions of the various plans.
The question many of you will immediately have is “how much money will I be getting?” You can use the pension calculator (which is being updated to reflect this decision) on Hewitt’s “Your Benefits Resources” website to estimate the value of your monthly retirement annuity based upon your personal choices and timing of your retirement. It is too soon to calculate the value of a lump sum option because it depends upon your age at the time of your election, whether you have a joint and survivor annuity or single life annuity, and interest rates at the time of distribution.
Formal notification regarding the termination of your specific plan will be mailed to your home next week, and your managers have been provided with the information currently available regarding the plans’ terminations. Q&As will be posted on the Employee Q&A Archive this afternoon, and we will be opening a thread for your questions on the Employee Forum next week. Additionally, this will be one topic among many during our next All Employee Webcast in mid-November. The date of that webcast will be announced following the launch of Discovery on STS-133.
For those participating in the USA Money Purchase Plan (MPP), contributions for current participants will end, as of December 31, 2010. Participants will continue to have an account in the plan, they can still direct investments, and can choose distribution of the account balance after termination of employment with USA. Beginning on January 1, 2011, employees assigned to the Integrated Mission Operations Contract (IMOC) organization and who were previously eligible for participation in a Company-sponsored pension plan (except for the USA Retirement Savings Plan), shall be eligible to participate in the MPP and will receive contributions for compensation earned after that date.
The termination of a defined benefit plan is a lengthy and complex process. It will take 18 to 24 months to complete the termination and process the final payments. We will be providing additional information about your payout options at the appropriate time during this period. Please watch for the termination notice in your home mail next week.
Transformative changes like this are not easy. This action was thoroughly vetted and considered, and we believe this has resulted in a “win-win” situation for our employees, USA, our customer and our member companies. We thank you for your support of these changes, and we remain committed to securing a successful future for USA.
Ginger Barnes and Dan Brandenstein
