Financial: Retirement Plan (Pension Plan)
At State Farm, we believe it's never too early to begin planning for retirement and recognize the importance of being prepared for life after work. Your Total Rewards retirement package is made up of two distinct plans: the defined benefit pension plan and the defined contribution 401(k) savings plan. While many companies are moving away from providing traditional pension plans, State Farm continues to offer both a pension plan and a 401(k) plan to assist you with your planning and saving for retirement. The inclusion of the pension plan as a vital piece of your retirement package is one more thing that makes State Farm a great place to work!
The pension plan is paid for by State Farm — at no cost to you — and the 401(k) is a tax-deferred savings plan into which both you and State Farm contribute. The combination of the two plans is intended to give State Farm employees an advantage in preparing for retirement.
To become a member of the pension plan, you must be at least age 21 and have one year of service at State Farm. Enrollment in the plan is then automatic.
The plan provides monthly income following your retirement from State Farm. By meeting a few simple requirements, you are entitled to receive a benefit. The plan also rewards participants for length of service with State Farm. As a result, the longer you are employed with the Company, the more valuable your benefit.
For example, a career employee – one with 35 years of service – who retires at age 62 or older could find their pension replaces about 40% of their income. Add in Social Security benefits, and up to 60% of pre-retirement income could be replaced!
Once you become a vested member of the plan, you can monitor and project your retirement income using an online calculator. This calculator, which allows you to run retirement estimates, is just one of the many tools State Farm offers to help you prepare and plan for retirement. You can also learn more about the pension plan and how your benefit is calculated and paid by watching Charting your Financial Future financial education workshops while employed with State Farm.
The pension benefit is based on several factors:
- Your pay
- Your age when you begin your benefit
- Your years of credited service — which is equal to your time as a member in the plan, to a maximum of 35 years
- A pension "factor" or "multiplier"
This brief overview of the State Farm Retirement (Pension) Plan is not intended to be a complete explanation of plan features. For more detailed information, please refer to the online Human Resources Policy Manual for U.S. employees.