The Retirement Power Trio: PG&E’s Pension, 401(k), and RMSA Explained

A Clear Breakdown of the Three Benefits That Could Fund Your Freedom

If you're like most PG&E employees, you’re putting in the hours, keeping things running, and looking forward to a day when you can retire with peace of mind.

But here’s the good news: you’re not doing this alone.

Unlike many employers today, PG&E still offers a robust set of retirement benefits. And when you understand how the pieces fit together, especially the pension, 401(k), and RMSA. You start to see how powerful your benefits package really is.

1. The Pension: A Paycheck for Life

A pension might sound like an old fashion, but that’s because it works. And PG&E still offers one of the most generous programs around.

Which Pension Do You Have?

There are two types of pension plans at PG&E, and your hire date and job classification determine which one you’re in.

Final Pay or Final Average Pay Pension (Traditional Defined Benefit)

• Applies to most employees hired before January 1, 2013
• Provides a monthly income for life, based on:
  • Your years of service
  • Your compensation
  • Your retirement age
• Link to Formulas

Union-represented employees that fall under the Final Pay Pension, which calculates your benefit based on your last 30 days of pay.

Management and A&T employees typically have the Final Average Pay Pension, which is based on the average of your highest-paid 36 consecutive months.

Cash Balance Pension

• Applies to employees hired on or after January 1, 2013
• Think of it like a growing account PG&E funds for you
• You get pay credits each year, plus interest
• You can choose a monthly payment for life or take a lump sum at retirement
• Link to Formula

This version offers flexibility. If you want more control or have other income sources, you can take the lump sum. If you want guaranteed income, you can take the monthly payments, just like the Final Average Pay Pension.

Why the Pension Matters

Your pension is a core income stream in retirement. It's

• Not tied to market performance
• Paid monthly like a pay check
• Designed to last for life

This is the piece that helps cover your fixed costs, housing, groceries, utilities, so that your other assets like your 401(k) can cover the extras.

Did you know, if you don’t make a Pension Pre-Retirement Beneficiary Designation, any vested benefit you have under thePG&E Retirement Plan will be forfeited if:

• You die before you start taking your pension benefit, and
• You’re single or in a domestic partnership, and
• You haven’t chosen your pre-retirement pension beneficiary (Don’t let that happen).
• Here is how to elect a beneficiary on your Pension, 401(k) and Life Insurance.

2. The 401(k): Build Wealth on Top ofStability

PG&E also offers a Retirement Savings Plan (RSP), commonly known as the 401(k), and it’s built to help you accumulate wealth while you work.

How It Works

You choose how much each pay check contributes, and PG&E matches a portion of that based on your role:

• Union employees: PG&E contributes a fixed percentage 60% on the first 6% or 75% on the first 8%. You can contribute up to $23,500 for the year and additional $7,500 if you are age 50 or older and individuals 60 to 63 can contribute an additional $3,750.
• Management employees: PG&E will match 75% of the first 6% or 8% of your pay that you contribute to the plan.

So yes, free money is on the table if you’re participating. The different matches are determined by which pension you are covered by.

Your Investment Options

• Tier 1 - Target Date Funds – Easy, diversified choices based on your retirement year
• Tier 2 - RSP Index Funds – Core options with broad market exposure
• Tier 3 - BrokerageLink – For more advanced investors who want access to a wider universe of mutual funds

You can adjust your investment mix at anytime, and yes, you can change your 401(k) contributions anytime, which is a key tool for managing taxes and optimizing your plan as you near retirement.

Powering your Retirement helps clients actively manage their 401(k)s with BrokerageLink, like the way FinancialEngines does, but with many more investment options.

Why the 401(k) Matters

This is your flexible asset

• You can control how it's invested
• You can draw from it strategically in retirement
• You can use it for big goals: travel, helping family, delaying Social Security, or Roth conversions

Combined with the pension, your 401(k) gives you a blend of stability and flexibility, and that’s a powerful combo.

3. RMSA: Health Care Help When You Need It Most

Many retirees worry about healthcare costs, and for good reasons. Premiums and out-of-pocket expenses can eat into retirement income fast.

That’s where the Retiree Medical Savings Account (RMSA) comes in.

What Is the RMSA?

While you’re working at PG&E, the company makes annual contributions to your RMSA. This money isn’t available to you until retirement, but when the time comes, it can be used to pay

• PG&E retiree medical premiums
• Contributions start at age 45
• Years of service prior to 45 counts toward Years of Service (YoS) bonus contributions at retirement
• Your Spouse accruals an account, too. They don’t get a YoS bonus.

The longer you work, the more PG&E contributes. And the balance grows with interest.

💡Example: A long-tenured employee may have tens of thousands of dollars in their RMSA by the time they retire. That’s a serious boost to managing post-retirement medical costs.

Who Qualifies?

Eligibility depends on your age and years of service at retirement. Most employees need to:

• Retire at age 55 or older
• Have at least 10 years of credited service
• Be eligible for PG&E retiree medical benefits

This is why timing matters, retiring too early could mean losing access to this benefit entirely.

Why the RMSA Matters

Health care in retirement is expensive and unpredictable. The RMSA help

• Smooth out that uncertainty
• Reduce your monthly expense
• Keep more of your pension and 401(k) income available for you, not insurance premiums

Bringing It All Together: The Retirement Power Trio

Here’s how these three benefits work in tandem:

Individually, each is useful. Together, they’re powerful. They give you a baseline of stability, the ability to grow and manage wealth, and the resources to handle rising medical costs.

Don’t Leave Any Piece Behind

One of the most common planning mistakes I see is underestimating one of these components. Some people focus too much on their 401(k) and forget about how much value the pension provides. Others assume Medicare will cover everything and overlook the value of the RMSA.

But your retirement isn’t one-dimensional.

It’s not just about money, it’s about freedom.
The freedom to stop working because you want to, not because you must.
The freedom to support your family, travel, volunteer, or just breathe a little easier.

And that freedom starts with knowing how to use your PG&E benefits well.

So, let’s talk. If you’re within 5 years of retirement, it’s time to run the numbers. If you’re still a decade away, we can start aligning your strategy now. And if you’ve just started at PG&E, know this:

You’re building something real. Something rare. Something powerful.

The Retirement Power Trio is already in your hands.
Let’s make the most of it.