Honeywell Pension: What You Should Know and Understand

Pension Benefits Honeywell International has been making news lately partly due to some of the policy changes and movements when it comes to the Honeywell pension plan. For starters, Honeywell shook the industry last year when it announced that the company was making the move a Mark-to-Market (MTM) method of accounting for its pension program. The announcement was well received and came at a cost for the company as it posted losses in its profits for the fourth quarter of the same year. In a Wall Street Journal article it was explained that the company registered $1.8 billion in losses (or expenses) due to this move for the pension plan. But with the loses came the benefits for the retirees of Honeywell who are receiving the pension.


Eligibility Concerns for Honeywell Pension, Explained

When it comes to retirement age, the minimum age at which one can retire is at Honeywell is 55 years old and at least 15 years of work seniority. The eligibility for full retirement will be at age 60, if one is a current employee of Honeywell at the time of application. Under the eligibility rules, it is also recommended that the person should have 85 points. The point system is based on the addition of the age of the employee and the number of years in service. At the current rate in which Honeywell provides pension benefit to employees, each employee who is eligible can get as much as $53.50 per month per year of working for the company. This figure is actually higher than other companies; say the Alliant Techsystems that only offer $47.50 per month for the same arrangement for their employees that will file for retirement and potential pension.

How Honeywell Pension is Calculated

Say an employee decides to retire from the company at the age of 55. Though this is not the ideal age, still the company accepts this kind of application. If you have 85 points yet you file for retirement at the age of 55, then the company can accept it with a corresponding reduction in potential pension. Using the same data, your pension will be reduced by 18 percent (0.3 multiplied by 60 remaining months for early retirement). Also if you haven’t met the 85 points then the pension can be reduced by 36 percent (0.3 multiplied by 120 months).

For example if you have accumulated 20 years of service for Honeywell, then to get your monthly pension, this years of service should be multiplied by $53.50 (the amount the company is willing to pay) less than the 18 percent reduction, due to early retirement.

Using the same data, at 25 years of service: 25 years x $53.50= $1337.50- $240.75 (18 percent) = $1096.75 a month pension

This means only one thing if one retires too soon from service then a corresponding reduction in monthly pension can be expected. For this reason, it is critical that one should pay attention to the retirement options before making a decision. The good news is that Honeywell is making the right adjustment when it comes to carrying its pension requirements. It’s shift in accounting approach though it cost the bottom line was made to help employees and future employees get a better Honeywell pension, and of course a better life.