The Merck U.S. pension plan is an automatic employer-sponsored retirement plan designed to replace a portion of your income in retirement. Think of it this way: It’s like receiving a “paycheck” in retirement.
Merck pays the full cost for your pension benefit – and the longer you stay at Merck the more it grows. Merck funds the plan and makes investment decisions on your behalf. You don’t contribute to the pension and you don’t have to make any decisions until you’re ready to retire.
You automatically participate in the pension plan after you are hired at Merck and you are 100% vested in the benefit after 3 years of vesting service or age 65 – whichever comes first. Assuming you are otherwise eligible, you can leave Merck with a pension benefit at that time.
When and how you receive your benefit depends on your legacy company, age, hire date and years of service.
You accrue your pension using the cash balance (CB) formula which uses a “notional” account to accrue a pension balance you receive when you leave Merck. You earn annual pay credits (based on age and years of service) and interest.
Annual pay credits (based on your age and service on December 31 of each year)
|
Age + Service |
Pay credit* |
|---|---|
|
39 or less |
4.5% |
|
40 – 49 |
5.5% |
|
50 – 59 |
6.5% |
|
60 – 69 |
8.0% |
|
70 or more |
10.0% |
Annual interest credits (Change in Consumer Price Index (CPI) + 3% (minimum of 3.3%))
|
Year |
Interest credit** |
|---|---|
|
2024 |
6.14% |
|
2023 |
10.11% |
|
2022 |
9.81% |
|
2021 |
4.17% |
|
2020 |
5.05% |
|
2019 |
5.18% |
|
2018 |
5.20% |
You accrue your pension benefit using two formulas: final average pay (FAP) and cash balance (CB).
Your service prior to January 1, 2013, is calculated using the FAP formula. Your service from January 1, 2013 through December 31, 2019, is calculated using the better of the FAP or CB formula. Your service for January 1, 2020 and beyond is calculated using the CB formula.
|
For service prior to January 1, 2013 |
For service January 1, 2013 to December 31, 2019 |
For service January 1, 2020 and beyond |
|---|---|---|
|
Final average pay formula |
Better of: Final average pay formula OR Cash balance formula |
Cash balance formula |
Final average pay (FAP)
FAP is the formula we use to determine your benefit for your service prior to January 1, 2013.
|
Legacy Merck |
Legacy Schering-Plough |
|---|---|
|
1.6% x FAP* x service beginning 7/1/95 (up to 35 years) plus 2.0% x FAP* x service before 7/1/95 minus 1.6% x estimated Social Security benefit x service (up to 50% of estimated Social Security benefit) |
1.5% x FAP* x service (up to 40 years) minus 1.43% x estimated Social Security benefit x service (up to 35 years) |
Cash balance (CB)
The CB formula was introduced in 2013 and is used to determine your benefit for your service beginning January 1, 2013, and beyond.
The CB formula defines your benefit as a notional account balance payable after you leave Merck or later. You earn annual pay credits (based on age and years of service) and interest.
Annual pay credits (based on your age and service on 12/31)
|
Age + Service |
Pay credit* |
|---|---|
|
39 or less |
4.5% |
|
40 – 49 |
5.5% |
|
50 – 59 |
6.5% |
|
60 – 69 |
8.0% |
|
70 or more |
10.0% |
Annual interest credits (Change in Consumer Price Index (CPI) + 3% (minimum of 3.3%))
|
Year |
Interest credit** |
|---|---|
|
2024 |
6.14% |
|
2023 |
10.11% |
|
2022 |
9.81% |
|
2021 |
4.17% |
|
2020 |
5.05% |
|
2019 |
5.18% |
|
2018 |
5.20% |
If you were hired on or after January 1, 2013, you can receive your full pension benefit at any age after you leave Merck if you have at least three years of service.
If you were hired before January 1, 2013, you can receive your full pension benefit once you are retirement-eligible at age 62 with at least 10 years of service (legacy Merck) or age 60 with 40 years of service (legacy Schering). You can receive a reduced benefit as early as age 55 with 10 years of service.
You can choose to receive your pension benefit as a lump sum or as an annuity.
For details, refer to the summary plan description (SPD) at onlinespd.com.
For more information, or if you are planning to retire, contact the Benefits Service Center at 800-66-MERCK (800-666-3725). Representatives are available 8:30 a.m. to 8:30 p.m. ET, Monday through Friday (excluding New York Stock Exchange holidays). Or go to netbenefits.com/merck.
If you’re planning to retire, be sure to review the “If you’re leaving Merck” page for important information about what you need to know and what you may need to do.
Did you hear about the guy who made a lot of money investing in apples?
Turns out he was in cider trading.
