Frozen Pension May Still Rise With Salary for Some Boeing Engineers

Boeing engineers recently rejected a new four-year contract deal that included annual wage pools of 7% in the first year and 5.5% in each of the following three years, along with an inflation-linked guaranteed minimum increase capped at 3%. The dispute over pay is straightforward for most workers, but for older Boeing employees with legacy pensions, a raise can have far-reaching consequences.

The company's pension language draws an important distinction: credited service stopped accumulating after December 31, 2018. However, Final Average Monthly Earnings can continue to reflect the highest average basic annual compensation over 60 consecutive months during the employee's last 120 months of service.

This means that later raises can still matter under pension formulas that use final-average earnings. Boeing's legacy plan uses multiple formulas, and the one that ultimately determines a worker's benefit matters. But 'frozen' does not necessarily mean every input into the pension stopped moving.

For someone born in 1960 or later, Social Security full retirement age (FRA) is 67. Claiming at 62 shrinks the retirement benefit to 70% of the FRA amount, while waiting until 70 raises it to 124%. This can create another issue for highly paid engineers who claim Social Security before FRA, as they may run directly into the retirement earnings test.