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title: How do Severance, Layoff, or Disability Affect My Phillips 66 Benefits?
description: The Phillips 66 Savings Plan and Retirement Plans help employees and retirees prepare for retirement. They offer investment options, loans, withdrawals, and planning tools to support participants in building and protecting their Real Wealth.
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# How do Severance, Layoff, or Disability Affect My Phillips 66 Benefits?

- [Phillips 66](https://insights.kingsview.com/tag/phillips-66)
- |
- March 2, 2026

- By
- [Keith Demetriades, CFP®, CKA®](https://www.kingsview.com/office/pampa-office/)

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*![keith circle headshot v3](https://insights.kingsview.com/hs-fs/hubfs/keith%20circle%20headshot%20v3.png?width=49&height=123&name=keith%20circle%20headshot%20v3.png)Keith's Note: "Phillips 66 employees and retirees, we understand that topics like layoffs, severance, and disability benefits can feel complicated and sometimes overwhelming. This post is designed to help you understand how these situations may impact your Phillips 66 retirement and benefit plans. Remember, this is meant to give you a clear overview—not to replace official plan documents or guidance from HR. For questions about your specific situation, be sure to reach out to your HR or Benefits representative,* [or contact me directly.](https://www.kingsview.com/office/pampa-office/)" *- Keith Demetriades, CFP®, CKA®| Financial Advisor Specializing in Phillips 66 Retirees.*

### **What Phillips 66 Retirees Need To Know About Severance (Layoff and Termination)**

**What Happens to Severance Pay and Credits?**

| **Severance Pay** | Explicitly excluded from Title VI FAE and Cash Balance Benefit Formula calculations. |
| --- | --- |
| **Pay Credits (Title VI)** | Stopped after December 31, 2008, even if actively employed. Terminated employees before this date receive no credits after termination. |
| **Interest Credits (Title VI)** | Continue after termination through the end of the calendar quarter preceding benefit payments. |

 

Defined Benefit Commencement and Reductions

**Phillips Retirement Income Plan (Title I)**

- - - **Early Retirement Reduction Eligibility:** If the participant's employment ends due to layoff, sale of assets, sale of stock, or transfer to an affiliated group during or after the calendar year in which they turn age 50, they will be eligible for Early Retirement Reduction, provided their benefit is not transferred to a successor employer's plan. 
                  - This reduction is 5% per year (or 0.4167% per month) for each month the benefit begins before age 60.
                  - If the participant does not meet the criteria for the Early Retirement Reduction, the Actuarial Reduction applies, which is generally 6% per year (0.5% per month) before age 65.

**Title I Layoff Provisions:** If a participant is laid off, they may receive:

- - - **Credited Service:** Based on 45 hours for each week of layoff pay for which they are eligible.**[![Real Wealth Insight Severance Blog](https://insights.kingsview.com/hs-fs/hubfs/Real%20Wealth%20Insight%20Severance%20Blog.png?width=300&height=263&name=Real%20Wealth%20Insight%20Severance%20Blog.png)](https://www.kingsview.com/office/pampa-office/)**
          - **Final Average Earnings (FAE) Extension:** Annual earnings used to determine FAE will be extended after the month of layoff for the number of months remaining until the end of the calendar year. This extension cannot exceed their layoff pay amount.
          - **Limited Social Security Make-Up:** If laid off during or after the calendar year they reach age 50 and they do not continue employment with a successor employer, participants may be entitled to a temporary limited Social Security Make-Up Benefit.

**Tosco Pension Plan (Title III)**

- - - **Deferred Vested Benefit Reduction:** If the participant leaves the company before age 55 but has at least 10 years of service, they have a Deferred Vested Benefit. They can choose to receive a reduced benefit as early as age 55, subject to the Deferred Vested Benefit Reduction. This reduction is calculated based on tables and is typically a larger reduction than the Early Retirement Benefit Reduction for those with at least 10 years of service who remained with the company until age 55.

### **Understanding How Disability Affects Phillips 66 Retiree Benefits**

**Can a Phillips 66 Laid-Off Employee Still Earn Credited Service?**

| **PRIP (Title I) & FAE (Title VI)** | Earn service if on approved leave and return within allowed timeframe. |
| --- | --- |
| **Tosco Pension (Title III)** | Eligible for disability retirement with ≥10 years service; accrual continues until benefit commences. If \<10 years, benefit calculated as if employment ended 2 years after disability start. |
| **Conoco Retirement (Title IV)** | Incapacity retirement if age ≥40 at termination, ≥10 years service, disabled while employed. No reduction for early payment; lump sum not available. |
| **FAE (Title VI)** | Monthly earnings credited equal to last full month of employment before disability (minus non-deferred incentive bonuses). |
| **Cash Balance Account (Title II)** | If no eligible monthly pay, only Interest Credits are applied. |

 

**Cash Balance Plans**

- - - **Phillips 66 Cash Balance Account (Title II):** If they do not receive eligible monthly pay, they receive only Interest Credits.

**Timing of Retirement Benefit Commencement Due to Disability**

- - - **PRIP (Title I) and Cash Balance (Title II):** If the participant is at least age 65, the retirement benefit must commence no later than the first of the month after any disability benefits received from a company long-term disability plan end.
          - **Tosco(Title III):** If eligible for a disability retirement benefit and receiving long-term disability benefits, the participant may delay starting their pension benefits until the latest of: their approved disability leave ends, their long-term disability benefits end, or they reach age 65.

**Long-Term Disability Offsets and Tax Implications**

The Phillips 66  long-term disability benefit will be offset by disability income received from any other source, including benefits from the company’s defined benefit retirement plan.

- - - The long-term disability benefit is reduced by the amount of the participant's Single-Life Annuity payment (or its equivalent if a lump sum is elected).
          - If the participant does not commence their retirement plan benefit or elects a rollover of their retirement benefit, the retirement benefit is NOT considered disability income for the long-term disability offset.

**Are There Early Tax Withdrawal Penalties?** 

The standard 10% federal early withdrawal tax penalty normally applied to distributions taken before age 59 ½ is waived if the payment is made because of permanent and total disability.

**Can I Submit Disability Claims and Appeals?**

- - - All claims and appeals involving a determination of disability are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved.
          - If a claim denial involves a determination of disability, the participant has 180 days to file an appeal.

### **Real Wealth Questions**

**If you’re within 5-10 years of retirement from Phillips 66, these questions matter:**

How do layoffs or early exits affect your healthcare coverage before you are eligible for Medicare?   
Are you eligible for Phillips 66’s disability retirement benefits?  
What other financial resources are available to you in the event that you become disabled or are forced to leave the company ahead of schedule?

### What To Do Next

Navigating a layoff or early retirement from Phillips 66 can have lasting effects on your pension, benefits, and long-term plan. Before making any decisions, review your severance details alongside your broader retirement picture — including healthcare, Social Security, and tax implications.

If you haven’t already, explore our other guides on [pension eligibility](https://insights.kingsview.com/what-are-my-pension-eligibility-and-payment-options) and [savings plan options](https://insights.kingsview.com/what-are-the-features-of-the-phillips-66-savings-plan) to see how these benefits fit together.

For personal guidance, connect with [Keith Demetriades, CFP®, CKA®](https://www.kingsview.com/office/pampa-office/), a financial advisor based in Pampa, Texas. Keith helps Phillips 66 employees and retirees truly understand what to do in the event of severance and how to fully understand their disability benefits. 

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## Frequently Asked Questions About Phillips 66 Severance and Disability Benefits

 How does a Phillips 66 layoff affect my pension or retirement benefits?

If you’re laid off from Phillips 66, your credited service and benefit accruals may continue for a limited time depending on your plan title and age. Under the Phillips Retirement Income Plan (Title I), laid-off employees may receive credited service and Final Average Earnings extensions through the end of the year of layoff, subject to certain limits.

 Can I still earn credited service if I’m on disability?

Yes. Participants on an approved disability leave can continue to earn credited service under most Phillips 66 retirement plans. For example, the Tosco Pension Plan (Title III) allows continued accrual for employees who are totally and permanently disabled with at least 10 years of service.

 Are early withdrawal tax penalties waived for disabled employees?

Yes. Distributions taken before age 59½ due to permanent and total disability are generally exempt from the 10% federal early withdrawal penalty.

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