Did 3M transfer my pension to an insurance company?

In June 2024, 3M transferred approximately $2.5 billion of ERIP obligations for approximately 23,000 retirees and beneficiaries to Metropolitan Tower Life Insurance Company (a MetLife subsidiary). Benefits began being paid by Met Tower Life on October 1, 2024. PBGC federal insurance ended for participants in this transfer group. If you received a letter from 3M or Met Tower Life about this transfer, you are in this group.

When does 3M freeze its pension?

3M announced in January 2024 that it will freeze defined benefit pension accruals for non-union U.S. employees effective December 31, 2028. Current employees will continue to earn pension credits through that date. Former employees with vested benefits, current retirees already receiving payments, and those who were already separated are unaffected by the freeze announcement.

What happens to the 3M pension if you are a Solventum employee?

When 3M spun off its healthcare division as Solventum Corporation on April 1, 2024, pension obligations for Solventum employees were legally transferred to Solventum's sponsored plan in March 2024 — prior to the spinoff date. Solventum's U.S. defined-benefit pension plan mirrors the 3M freeze structure: non-union accruals also stop after December 31, 2028. Your specific benefit statement and elections are now managed through Solventum's benefits portal.

How do interest rates affect my 3M ERIP lump sum?

3M's ERIP uses IRS §417(e) segment rates to convert your monthly annuity into a present-value lump sum. Higher rates produce smaller lump sums; lower rates produce larger ones. The November 2025 segment rates (4.07% / 5.15% / 6.01%) are significantly higher than the near-zero environment of 2020–2021 — the same lifetime pension benefit that generated a $1.1M lump sum in 2021 may generate $700K–$850K today at current rates. Your plan's specific look-back period (which month's rates apply to your commencement date) is in your Summary Plan Description.

What is the Rule-of-55 trap with the 3M VIP 401(k)?

If you separate from 3M in the calendar year you turn 55 or later, you may take penalty-free withdrawals from your 3M Voluntary Investment Plan (VIP) 401(k) under IRC §72(t)(2)(A)(v) — no 10% penalty, no need for a 72(t) SEPP schedule. However, if you roll the VIP to an IRA after separation, this exception does not carry over. IRA withdrawals before age 59½ are subject to the 10% penalty absent a separate exception. Do not roll the VIP to an IRA before 59½ unless you have no need for penalty-free access between 55 and 59½.

3M Pension Lump Sum vs. Annuity: A 2026 Guide for ERIP Participants

3M's defined-benefit pension — the Employee Retirement Income Plan (ERIP) — has undergone three major structural changes since 2024. First, 3M transferred approximately $2.5 billion in obligations for roughly 23,000 retirees to Metropolitan Tower Life Insurance Company, ending PBGC coverage for that group. Second, 3M announced a full pension freeze for non-union employees effective December 31, 2028. Third, when 3M spun off its healthcare business as Solventum Corporation in April 2024, pension obligations for Solventum employees were carved out into a separately-sponsored plan that mirrors the same 2028 freeze. If you are a current or former 3M or Solventum employee with ERIP accruals, all three events affect how you should evaluate the lump-sum vs. annuity decision.

Who this guide is for: Current 3M non-union employees continuing to earn ERIP credits through December 31, 2028; former 3M employees with deferred vested pension benefits; current 3M retirees receiving or about to commence ERIP benefits who were not in the 2024 Met Tower Life transfer group; and Solventum employees or retirees whose pension was transferred to Solventum's sponsored plan before the April 2024 spinoff. If you received a letter from Metropolitan Tower Life indicating that your benefits are now administered by Met Tower Life, the PBGC section below applies directly to you.

The 2024 pension risk transfer: PBGC coverage ended for ~23,000 retirees

In June 2024, 3M purchased a group annuity contract and transferred approximately $2.5 billion of ERIP obligations for approximately 23,000 U.S. retirees and beneficiaries — representing roughly 60% of ERIP retiree participants — to Metropolitan Tower Life Insurance Company, a subsidiary of MetLife.¹ Metropolitan Tower Life began paying and administering those retirement benefits on October 1, 2024.

This is a pension risk transfer (PRT), the same type of transaction executed by IBM ($22 billion total), AT&T ($8.05 billion to Athene), Verizon (~$13.4 billion to Prudential and RGA), RTX ($2.5 billion to Prudential in late 2025), GE, FedEx, and Lockheed Martin. The legal consequence is unambiguous: once obligations are transferred to an insurance company, PBGC federal insurance coverage ends entirely for that participant group.

This matters for the lump-sum decision in two ways:

If you are in the Met Tower Life group: Your monthly annuity is now a contractual promise from Metropolitan Tower Life, backed by MetLife's insurance reserves and state insurance guaranty funds — not PBGC. Most states provide guaranty fund coverage for $250,000 or more per insurer per insured, but this is not equivalent to PBGC insurance, which covers up to $7,789.77/month ($93,477/year) at age 65 in 2026.² MetLife is a major, well-capitalized insurer — but the counterparty and protection structure differs from a PBGC-backed plan.
If you are not yet in the transfer group (still accumulating or about to commence): 3M retains residual PBGC coverage for the remaining ERIP population. However, given the 2024 transfer and the announced 2028 freeze, additional PRTs are plausible as 3M continues to reduce pension risk on its balance sheet — a consideration for employees with large expected annuities exceeding the PBGC cap.

The transaction was funded entirely from existing ERIP trust assets — 3M made no additional cash contribution. 3M recognized a non-cash pre-tax pension settlement charge of approximately $0.8–$0.9 billion in Q2 2024 in connection with the transfer.¹

The 2028 pension freeze: what it means for current employees

On January 8, 2024, 3M announced that it will freeze defined-benefit pension accruals for non-union U.S. employees effective December 31, 2028.³ After that date, no additional service years or compensation increases will translate into higher pension benefits. What accrues through December 31, 2028 is locked.

Critically, the freeze does not affect employees' accrued benefits to date. ERISA §203 prohibits the reduction or elimination of accrued benefits — your earned pension through the freeze date is protected. The freeze stops future accruals; it does not reduce past ones.

For current employees, the freeze creates a planning urgency: years of service between now and December 31, 2028 represent your last opportunity to increase your ERIP benefit. For those within five to six years of retirement who were counting on additional accruals, this may push the retirement timeline up. For those farther from retirement, it changes the long-term pension math substantially — more of your retirement income will need to come from the VIP 401(k) or personal savings after 2028.

Simultaneously with the freeze announcement, 3M enhanced its Voluntary Investment Plan (VIP) 401(k) contributions to offset the pension reduction: a dollar-for-dollar match up to 5% of pay, plus an additional 3% non-elective company contribution whether or not you contribute — 8% total employer contribution potential.³

Solventum employees: your pension is in a parallel plan with the same freeze

3M completed the spin-off of its healthcare business as Solventum Corporation on April 1, 2024. In March 2024, prior to the spinoff, 3M legally transferred all pension and postretirement plan obligations for Solventum-assigned employees from the 3M ERIP to a Solventum-sponsored defined-benefit plan.⁴

The Solventum pension plan is structured as a successor to the 3M ERIP and mirrors its design — including the same December 31, 2028 freeze for non-union participants. If you are a former 3M healthcare employee who transitioned to Solventum, your pension credit, formula, and options remain substantively intact, but the plan sponsor is now Solventum, not 3M. Benefit statements, election forms, and SPD documents are managed through Solventum's HR portal rather than the 3M benefits site.

How the ERIP benefit is calculated

The 3M ERIP is a final-average-pay defined benefit plan. Benefits are expressed as a function of your years of credited service and your final average pay — typically calculated over the highest consecutive years of compensation as defined in the plan document. The benefit is payable as a straight-life annuity starting at normal retirement age, with actuarial adjustments for earlier or later commencement and for survivor election choices.

Because 3M has not published its specific accrual rate formula publicly, you should obtain your actual benefit calculation from your Benefits Statement or your 3M Summary Plan Description (SPD), both available through 3m.com/open. The SPD will specify the exact percentage multiplier, the definition of "final average compensation," whether the formula is offset by Social Security, and the early-commencement reduction factors for retiring before age 65.

The lump-sum offer, if available, is the actuarial present value of your future annuity stream — calculated using IRS §417(e) segment rates applied during the plan's defined look-back period.

How segment rates determine your lump sum

Like all corporate defined-benefit plans subject to IRC §417(e), the 3M ERIP calculates lump sums by discounting future monthly annuity payments using IRS-prescribed segment rates. Higher rates compress the lump sum; lower rates expand it — an inverse relationship that has cost some 3M employees $100,000 or more compared to a 2020–2021 lump sum on the same pension benefit.⁵

The segment rates are structured in three tiers by payment timing:

Segment	Covers payments due in…	Nov 2025 rate
First	0–5 years	4.07%
Second	5–20 years	5.15%
Third	20+ years	6.01%

Most plans using November as their look-back month apply these November 2025 rates to all benefit commencements during calendar year 2026 — meaning whether you retire in January 2026 or December 2026, the same rates apply. However, the specific look-back month and "stability period" for 3M's ERIP is defined in the plan document. Verify this before adjusting your retirement date to try to capture a different month's rates, because mistiming by even one month against the plan's stability period produces no benefit.

To illustrate the interest-rate impact: a $4,500/month straight-life annuity might have produced a lump sum of approximately $1.1–$1.2 million at 2021 rates. At the November 2025 rates above, the same annuity might produce $720,000–$860,000 — a gap of $250,000–$480,000 from the same underlying benefit, driven entirely by the rate environment.

No COLA: fixed nominal payments erode in real terms

The 3M ERIP annuity pays a fixed nominal dollar amount — there is no automatic cost-of-living adjustment. A $4,500/month payment in 2026 pays the same $4,500 in 2046. At 2.5% average annual inflation, that payment loses approximately 39% of its real purchasing power over 20 years — equivalent to receiving roughly $2,740 in today's dollars by 2046.

Federal employees (FERS, CSRS) and military retirees receive annual COLA adjustments. Most corporate pensions, including 3M's ERIP, do not. This makes the no-COLA penalty most severe for employees retiring at 58–63 with 25–30 years of retirement ahead. A lump sum invested in a diversified IRA can maintain real purchasing power above inflation over time — but at the cost of market and longevity risk. Use our COLA value calculator to quantify what an annual inflation adjustment would be worth for your benefit level and expected retirement horizon.

The 20% withholding trap — direct rollover is essential

If 3M's plan distributes the lump sum as a check payable directly to you, federal law requires mandatory 20% income tax withholding. On a $900,000 lump sum, that is $180,000 withheld. To complete a tax-free rollover to an IRA, you must deposit the full $900,000 within 60 days — including $180,000 from other sources that you may not have liquid. Any shortfall is treated as a taxable distribution, and amounts distributed before age 59½ may also trigger a 10% early-distribution penalty.

The correct approach: elect a direct rollover under IRC §402(c), where the funds transfer directly to your IRA custodian without passing through your hands. No withholding applies on a properly executed direct rollover. Coordinate with your IRA custodian to ensure they can receive the incoming transfer before you submit your election to 3M's benefits administrator.

Get matched with a fee-only advisor familiar with 3M and Solventum benefits

The PBGC transfer, the 2028 freeze, and the Solventum split each change the lump-sum math in specific ways. A fee-only advisor — who charges you directly, not a commission on the rollover — models your actual ERIP benefit against your longevity outlook, survivor needs, and tax situation without a financial incentive to push you toward the IRA rollover.

Fee-only · No commissions · Free match · No obligation

Coordination with the VIP 401(k) — Rule-of-55 trap

Most 3M and Solventum employees carry a Voluntary Investment Plan (VIP) 401(k) balance alongside their ERIP pension benefit. Under the enhanced contribution structure announced with the 2028 freeze, the VIP is now the primary vehicle for post-2028 retirement saving. 3M matches dollar-for-dollar up to 5% of pay and contributes an additional 3% non-elective — up to 8% total employer contribution.³

The VIP qualifies for the Rule of 55 under IRC §72(t)(2)(A)(v): if you separate from 3M in the calendar year you turn 55 or later, you may take penalty-free withdrawals from the VIP without waiting until 59½ or establishing a 72(t) SEPP arrangement. This exception applies to qualified plan distributions from the employer's plan — not to IRA distributions.

The trap: if you roll the VIP balance to an IRA after separation from 3M, the Rule-of-55 exception does not transfer. IRA withdrawals before 59½ face the 10% early-distribution penalty (absent a SEPP or other exception). Two planning implications:

If you need income between age 55 and 59½: keep the VIP in place and draw penalty-free under Rule of 55. Don't roll the VIP to an IRA until you've determined you don't need pre-59½ access.
If you're 59½ or older and don't need early access: rolling the VIP to an IRA typically provides better investment flexibility, Roth conversion optionality, and simpler estate planning. In that case, also evaluate whether a Roth IRA conversion ladder starting immediately post-rollover makes sense to reduce future RMD exposure.

The ERIP pension lump-sum decision and the VIP rollover decision are separate evaluations. They interact primarily through income bracket management and IRMAA thresholds in the year of each rollover — not through the benefit calculation itself. Don't conflate them.

Five questions that determine your decision

Are you in the Met Tower Life transfer group? If yes, your annuity is now insured by a MetLife subsidiary under state guaranty funds — not PBGC. For high annuities near or above the PBGC cap level ($7,789.77/month in 2026), this changes the counterparty risk dimension of the annuity vs. lump-sum analysis. A lump sum eliminates insurer counterparty risk by moving funds to your own IRA.
What is the implied yield of your annuity? Divide your annual ERIP annuity by the lump-sum offer. If the ratio implies a 5%+ annual return just to match the annuity's lifetime value, the annuity typically wins for longevity — unless you can consistently invest above that threshold and outlive the break-even age. Use our break-even calculator with your actual numbers.
How does the 2028 freeze change your final accrual? If you're currently 57–62 with a strong salary trajectory, the years between now and December 31, 2028 represent concentrated benefit-building time. Retiring before the freeze date forfeits those remaining accruals. Model the difference between your pension at today's service level vs. at the December 2028 cutoff — the difference in lump-sum value may justify delaying retirement.
What is your survivor situation? A straight-life ERIP annuity stops at your death. Under ERISA §205, if you are married, your spouse must provide written consent to waive the qualified joint-and-survivor annuity default (at least 50% surviving benefit). The J&S election reduces your monthly payment by 10–15% for a 50% survivor benefit — modeling whether life insurance or the J&S election is more cost-effective for your household requires actuarial comparison based on your age gap and health history.
Do you need pre-59½ income from the VIP? This is separate from the pension decision but must be answered before you execute any rollover. If yes, leave the VIP in the 401(k) plan for Rule-of-55 access.

After the rollover: RMDs, Roth conversions, and IRMAA

An ERIP lump sum rolled to a traditional IRA enters the RMD regime under SECURE 2.0. Required minimum distributions begin at age 73 (born 1951–1959) or 75 (born 1960+), calculated annually from the Uniform Lifetime Table.⁶ For a $900,000 IRA, the first RMD at age 75 is approximately $900,000 ÷ 24.6 ≈ $36,585 — fully taxable as ordinary income. By age 85 (divisor ~14.8), the same original balance (if growing at ~5%) generates RMDs that may exceed $60,000/year.

Combined with 3M pension annuity income or Social Security, these RMDs can push modified adjusted gross income above the 2026 IRMAA Tier 1 threshold of $109,000 single / $218,000 MFJ, adding $625–$2,625 in annual Medicare Part B and D surcharges per beneficiary.⁶

Key post-rollover strategies for 3M retirees:

Roth conversion window: Retiring at 60–64 with RMDs not beginning until 75 creates 11–15 years to convert traditional IRA dollars to Roth at 22–24% rather than 32–35% under forced RMDs. Use our Roth Conversion Optimizer to model optimal annual conversion amounts given your ERIP annuity income and Social Security timing.
QLAC to defer RMDs: A Qualified Longevity Annuity Contract (up to $210,000 in 2026 per IRS Notice 2025-67) purchased inside the IRA is excluded from RMD calculations until age 85, deferring that portion's distributions and reducing near-term IRMAA exposure.⁶
QCD strategy after 70½: Qualified Charitable Distributions up to $111,000/year (2026) satisfy RMDs without adding to taxable income — an efficient combination of charitable giving and Medicare premium management.
Asset allocation shift: Your ERIP annuity (whether kept or exchanged for a lump sum) functioned as a fixed-income/bond-like asset in your overall portfolio. After rolling to an IRA, that fixed-income position no longer exists in the portfolio. Your remaining investable assets can shift more toward equities — particularly if Social Security and any retained annuity income together cover core living expenses.

3M Company, Press Release: 3M Transfers a Portion of U.S. Pension Payment Obligations (June 2024). 3M transferred approximately $2.5 billion of ERIP obligations for approximately 23,000 U.S. retirees and beneficiaries to Metropolitan Tower Life Insurance Company. Benefits effective October 1, 2024. Non-cash pre-tax settlement charge $0.8–$0.9 billion recognized Q2 2024. No additional 3M cash contribution required. Verified September 2026.
PBGC, Maximum Monthly Guarantee Tables. 2026 maximum monthly guarantee for a 65-year-old straight-life annuitant: $7,789.77/month ($93,477/year); joint-and-50% survivor: $7,010.79/month. PBGC coverage applies to qualified defined-benefit plans and ends when obligations are transferred via group annuity contract purchase (pension risk transfer). Verified September 2026.
3M Company, 3M Announces U.S. Pension Plan Actions (January 8, 2024). 3M to freeze defined-benefit pension plan for non-union U.S. employees effective December 31, 2028. Enhanced VIP 401(k): dollar-for-dollar match up to 5% of pay plus 3% non-elective employer contribution (8% total employer contribution potential). Employees continue accruing ERIP benefits until freeze date. Former employees with vested benefits and current retirees unaffected. Verified September 2026.
Solventum Corporation, 3M Completes Spin-off of Solventum (April 1, 2024). 3M legally transferred pension and postretirement plan obligations for Solventum-assigned employees in March 2024, prior to the spinoff date. Solventum's U.S. defined-benefit pension plan is a successor to the 3M ERIP; non-union accruals freeze December 31, 2028. Verified September 2026.
IRS, Minimum Present Value Segment Rates. IRS §417(e)(3) segment rates for November 2025: 4.07% (first segment, 0–5 years), 5.15% (second segment, 5–20 years), 6.01% (third segment, 20+ years). The specific look-back period and stability period applied by the 3M ERIP are defined in the plan's Summary Plan Description — verify through 3m.com/open or your SPD before adjusting your retirement date based on rate timing.
IRS, IRA Required Minimum Distributions. SECURE 2.0 RMD start ages: 73 (born 1951–1959), 75 (born 1960+). IRS Notice 2025-67: 2026 QLAC limit $210,000; QCD limit $111,000. IRMAA Tier 1 threshold: $109,000 single / $218,000 MFJ for 2026 (CMS). Uniform Lifetime Table divisors from IRS Pub. 590-B, T.D. 9930.

Content verified September 2026. 3M and Solventum benefit rules, payment options, and segment rates change; confirm current rates and your specific benefit calculation through 3m.com/open, Solventum's benefits portal, or your ERIP Summary Plan Description. This page is informational and does not constitute financial, tax, or investment advice.