By Ian Hoffman, CFP®
For many long-tenured employees, the Johnson & Johnson pension freeze means one pension may now run on two formulas. Since January 1, 2026, eligible U.S. non-union Johnson & Johnson (J&J) employees have earned future benefits under the Retirement Value Plan (RVP) formula while keeping Final Average Pay (FAP) benefits earned through 2025.
What Changed on January 1, 2026?
At retirement, the total pension is generally the frozen FAP benefit plus RVP benefits earned from 2026 on. The freeze preserves FAP benefits earned through 2025, though start date and payment option affect the monthly amount.
Who Is Affected?
The change affects current eligible U.S. non-union employees generally last hired by December 31, 2014, and in a covered position by July 1, 2015, subject to plan terms. Those on RVP generally stay on it.
Two Pension Formulas, Two Sets of Rules
Table 1: FAP vs. RVP at a Glance
| FAP | RVP | |
| Service covered | Through December 31, 2025 | From 2026 for former FAP participants |
| Calculation | Pay and service through 2025 (highest five consecutive years of pay within the final 10) | Yearly credit of 15% of eligible plan earnings |
| Lump sum? | Generally no | Yes, if elected |
| Default if married | Joint & 50% annuity | Joint & 50% annuity |
The Final Average Pay Benefit
FAP is designed to pay a lifetime annuity (monthly payments). Options include:
- Life Annuity: The default if unmarried
- Joint & Survivor: Your survivor receives 25%, 50%, 66⅔%, 75%, or 100% of your monthly payment after your death.
- Life & Period Certain: 5, 10, 15, 20, or 25 years
- Level Income: Adjusts payments around Social Security if they start before 62
The Retirement Value Plan Benefit
Plan earnings include base pay and the annual performance bonus, within federal limits. Credits build a lump sum (one payment) payable at 65, with the full amount available at 62. Unlike a 401(k), RVP doesn’t earn interest and isn’t a separate account.
RVP also offers a Life Annuity or Joint & Survivor at 50%, 75%, or 100%. Because an annuity is the default, the lump sum must be elected if desired. Your payment choice and any rollover election can affect when you owe taxes and how much you owe in taxes, so it may help to review this choice with your financial advisor and a tax professional before making an election.
What Details May Surprise Long-Tenured Employees?
A 2027 promotion may raise pay and that year’s RVP credit, but it generally doesn’t increase the frozen FAP benefit.
A hypothetical from J&J’s plan materials shows why later service counts: someone 45 with 15 years of service at the end of 2025 who stays until 55 could start FAP at 55 at 72% of the age-65 amount.
If you leave at age 55 or later, these figures apply to both parts.
Table 2: Percentage of Benefit Payable if You Leave J&J at 55 or Later
| Age payments begin | Percentage of full (unreduced) benefit |
| 62 | 100% |
| 60 | 92% |
| 57 | 80% |
| 55 | 72% |
Survivor options can lower payments further. Leaving before 54 (or at 54 with under 10 years of service) generally brings steeper FAP reductions, such as 88% at 62 after leaving at 50 to 53 with 15+ years; RVP uses a different schedule.
After 55, both parts generally must begin together, though forms can differ. Starting generally isn’t automatic: FAP payments begin on the 1st of a month after leaving J&J, no earlier than the 55th birthday and no later than the first of the month on or after the 65th (or after leaving, if later).
What Should I Consider Now?
When I review a J&J pension estimate, I often check whether it separates frozen FAP and projected RVP benefits. Other items to consider:
- Savings Plan (401(k)): J&J matches 75% of the first 6% of eligible pay contributed, so contributing at least 6% is generally needed to receive the full match. If contributions vary during the year, an annual adjustment may apply.
- Payment and survivor choices: Each part’s form can be compared separately, and couples may want to decide together.
- Lead time: Applications generally go in roughly 90 days ahead.
Where Can a Fiduciary Advisor Fit?
As an independent, fee-based fiduciary firm, we help pharmaceutical and medical professionals map both pension parts alongside Savings Plan assets, employer stock, Social Security, and survivor income. We work to identify and evaluate retirement income options and can coordinate with your CPA or attorney on tax and legal questions.
To discuss how these J&J pension benefit changes may impact your broader retirement plan, visit thrivewealth.com/contact.
Frequently Asked Questions on the Johnson & Johnson Pension Freeze
Can I take my J&J Final Average Pay pension as a lump sum?
Generally, no; FAP is paid as a monthly annuity. Narrow exceptions include automatic lump sums for total benefits of $5,000 or less and, in limited cases, a pre-retirement survivor benefit if an employee dies after 55 before payments begin. Consider confirming the forms in your benefit materials.
Does the J&J pension freeze reduce the pension I’ve already earned?
Generally, no. The FAP benefit earned through December 31, 2025, is preserved; the freeze stops the FAP benefit from growing further.
Does working past 2025 help my J&J Final Average Pay pension?
It may. Continued service can reduce FAP early retirement reductions, and you may continue to accrue separate RVP credits during this time.
How could the J&J pension freeze affect my retirement date?
A projection that assumed continued FAP growth may need updating, along with savings, taxes, Social Security, and spending.
How might the J&J pension freeze affect my spouse’s survivor benefit?
The freeze doesn’t remove the decision regarding survivor benefits. Survivor options may continue income for a spouse but generally lower payments while both are living. Choosing anything other than a 50% or greater joint and survivor option, including a life annuity or the RVP lump sum, needs a spouse’s notarized consent. Under the plan’s rules, the form and survivor beneficiary generally can’t be changed once monthly payments begin.
About Ian
Ian Hoffman, CFP®, is a Relationship Manager at Thrive Wealth Management, LLC, where he works closely with advisors to keep clients on track with their long-term financial goals. Ian takes pride in his clear, straightforward guidance and works to build strong, holistic relationships with clients, while helping them navigate complex financial matters.
Disclosure:
Thrive Wealth Management, LLC is not affiliated with, endorsed by, or sponsored by Johnson & Johnson or any of its affiliates. References to Johnson & Johnson and to the Consolidated Retirement Plan of Johnson & Johnson and the Johnson & Johnson Savings Plan are for identification purposes only. Statements regarding plan formulas, payment forms, early retirement reductions, and matching contributions reflect Johnson & Johnson summary plan descriptions as of the date of publication, are subject to change, and may not describe your specific participation. The official plan documents and your plan administrator govern.
This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. Features, options, and potential benefits may vary by pension formula and employee. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication. Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice.
Please consult with the qualified professional(s) of your choosing for legal and accounting advice.
Please visit https://thrivewealth.com/disclosure for additional information regarding the professional designations and credentials discussed. Professional designations and credentials do not guarantee success or any particular investment or financial outcome.
Past performance does not guarantee future results. All investing comes with risk, including risk of loss.
