Mayo Clinic Pension: A Simple Guide (2025)
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Table of Contents
- Who Can Join?
- How Are Benefits Calculated?
- What Does “Vested” Mean?
- How to Estimate Your Benefits
- What If You Retire Early?
- Payment Options
- What Happens If You Become Disabled?
- Benefits for Your Family If You Pass Away
- Cost-of-Living Adjustments
- What Happens If You Leave and Come Back?
- What If You Have a Dispute?
- Are Pension Payments Taxed?
- Plan Amendments and Changes
- What If the Plan is Terminated?
Who Can Join?
The Mayo Pension Plan helps employees save for retirement with benefits that grow over time. Let’s break down the key parts in simple, easy-to-understand language.
You can join the plan if you’re at least 21 years old and work in a regular, full-time or part-time job with Mayo Clinic. Temporary or on-call workers, as well as students like residents or fellows, aren’t eligible (Page 5).
How Are Benefits Calculated?
Your benefits depend on when you joined the plan:
- Before January 1, 2015: Calculated using two methods: a “Final Average Pay” formula for service before 2015 and an “Annual Accumulation” formula for service after 2015 (Page 6).
- After January 1, 2015 but before January 1, 2023: Uses the Annual Accumulation formula only, which grows each year based on salary (Page 9).
- After January 1, 2023: Uses the “Stable Lump Sum” formula, which provides a lump-sum benefit at retirement (Page 10).
How Your Pension Benefit is Calculated
The formula depends on when you first became eligible for the plan.
Final Average Pay + Annual Accumulation
- Pre-2015 service: based on your highest 36 months of pay and years of service.
- Post-2014 service: grows each year with Annual Accumulation credits.
- Formula caps service at 30 years (SPD p. 6).
Annual Accumulation Only
- Each year adds credits based on your pay.
- Simpler formula than FAP, but still provides lifetime income.
- Applies if first eligible between Jan 1, 2015 and Dec 31, 2022 (SPD p. 9).
Stable Lump Sum
- Credits added each year: 18% of pay up to IRS limit + 8% above Social Security wage base.
- Benefit paid as a lump sum at retirement (convertible to an annuity if elected).
- Applies to new hires and those who elected the SLS option in 2023 (SPD p. 10).
Tip: If you leave and return, new service follows the formula in effect when rehired; earlier accruals are preserved (SPD p. 10).
What Does “Vested” Mean?
Vesting means you keep your pension benefits even if you leave Mayo before retirement age. From the plan:
“The non-forfeitable right to a benefit under the Plan. A participant’s benefit is Vested when the participant is either:
(a) age 28 or more with at least three years of Benefit Service, or
(b) age 21 or more with five years of Vesting Service and some benefit service.” (Page 35)
This ensures you’ll receive your pension once you reach retirement age, even if you change jobs.
How to Estimate Your Benefits
You can use the Your Pension Estimator tool on HR Connect or the Mayo employee portal. It calculates projected benefits based on salary and years of service, and lets you model different scenarios like earlier retirement or salary changes.
What If You Retire Early?
You can retire before age 65, but your pension is reduced since it starts earlier. The reduction depends on your age and years of service when you retire (Page 17). The earlier you retire, the greater the reduction.
Payment Options
When you retire, you can choose how to receive your pension (Pages 23–24):
- Monthly payments: Lifetime income. Joint-and-survivor options let your spouse or beneficiary continue receiving benefits after your death.
- Lump sum: A one-time payout, but no ongoing monthly income.
How Your Pension Can Be Paid
Life Only
- Highest monthly income.
- Pays for your lifetime only; ends at death.
- Good when survivor income isn’t needed.
Life with 5/10/15-Year Certain
- Pays for life with a guaranteed minimum period.
- If death occurs within that period, payments continue to your beneficiary.
- Lower monthly amount than Life Only.
Joint & Survivor (50% • 66% • 75% • 100%)
- Pays for your life; your chosen % continues to your spouse/beneficiary.
- Higher survivor % → lower amount while both are alive.
- Often used to protect a spouse’s income.
Lump Sum
- One-time payout; no monthly checks afterward.
- Can roll to an IRA/plan to defer taxes (otherwise 20% federal withholding).
- Value depends on IRS interest rates and mortality at commencement.
Spousal consent may be required for certain elections. See SPD pp. 23–24 for forms; p. 24 for tax/withholding details.
What Happens If You Become Disabled?
If you become disabled while working, your pension continues to grow as if you were still employed, based on your salary before the disability. At age 65, benefits begin based on this adjusted amount (Page 21).
Benefits for Your Family If You Pass Away
If you die before retirement, your spouse or beneficiary may receive benefits. The amount depends on the pension option you selected, such as a joint and survivor annuity (Page 22). Make sure your beneficiary designations are up to date.
Cost-of-Living Adjustments
If you meet certain age and service requirements, benefits earned before 2004 may increase annually (up to 1.5% per year). Pension amounts earned after 2003 do not receive COLA adjustments (Page 20).
What Happens If You Leave and Come Back?
If you leave Mayo and later return:
- Returning within a certain timeframe may allow you to continue under your prior formula.
- Returning after a longer break may place you under the newer formula (e.g., Stable Lump Sum for employees hired after January 1, 2023) (Page 10).
What If You Have a Dispute?
If you believe your pension was calculated incorrectly, you can file a written claim with the Retirement Plan Claims Committee. This must be done within one year of when you knew (or should have known) about the issue. If denied, you have the right to appeal, and ultimately to federal court if necessary (Page 25).
Are Pension Payments Taxed?
Yes. Pension payments are subject to federal, state, and local taxes. For lump sums, 20% is automatically withheld for federal tax unless you roll the amount into an IRA or another retirement account (Page 24).
Plan Amendments and Changes
Mayo Clinic can change or end the plan, but you won’t lose benefits already earned and vested. Changes only affect future accruals (Page 28). Stay alert for plan updates from Mayo Clinic.
What If the Plan is Terminated?
If the Mayo Pension Plan ends, the Pension Benefit Guaranty Corporation (PBGC) may step in. Most participants still receive their benefits, though adjustments may apply (Page 29).
About Fortress
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Book a CallReferences
- Mayo Pension Plan Summary, January 2025
- Eligibility, p. 5
- Calculation methods, pp. 6, 9–10
- Vesting, p. 35
- Early retirement, p. 17
- Payment options, pp. 23–24
- Disability, p. 21
- Death benefits, p. 22
- COLA, p. 20
- Rehire rules, p. 10
- Claims, p. 25
- Tax withholding, p. 24
- Amendments, p. 28
- Termination/PBGC, p. 29
Disclosures
Fortress Financial Group, LLC (“Fortress”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Fortress and its representatives are properly licensed or exempt from licensure.
All information provided is from sources believed to be accurate and updated. The opinions voiced are for general information only and are not intended as specific advice.
The views on this page are the views of Fortress Financial Group, LLC and not the views of Mayo Clinic. Mayo Clinic and Fortress Financial Group are not affiliated._
