What is the latest date of separation in order to have my lump sum calculated based on current interest rates and not next quarter's rates (when I expect rates to further increase)?
What are the implications of the Benefits Commencement Date being set by default to 3 months after date of separation for non-vested retirees? Does it mean that unfortunately I cannot have my lump sum calculated based on this quarter's rates?
At what point [interest rate] is it no longer worth to take the lump sum and go for the annuity.
@hcl yes, thank you, that checks out. What’s different with vested non-retirees is that the BCD is on the first of the month but 3 months (!) after the separation date. So in order to “take advantage” of yet-unknown 1Q23 interest rates, your separation date has to be on or before Nov 30 , 2022. Because the first of the month 3 months after that is March 1, 2023. If the separation date were instead Dec 1, you’d be looking at a BCD of April 1, which would put you into 2Q23 rates. This is big for people who are looking to resign soon and make the most of their (quickly evaporating) lump sum.
I know this for retirees, so others may be different. The BCD is always the first day of the month following your separation/retirement date. So, to get the Q4 rate, your last day would have to be November 30 or earlier. To get the Q2 rate this year, my last day was May 31. If my last day had been June 1, the BCD would have been July 1, and the rate would have been the Q3 rate.
The tldr version is last day to separate and get the current quarter rate is the last day of the second month of the current quarter
Thanks guys! But none directly address the scenario I’m outlining. I feel like there should be a clear answer here, especially since there’s no incentive anymore for vested non-retirees to work into January given 1) no more vacation accrual and 2) rising interest rates. Has anyone already gotten a clear answer? The BCD being set at 3 months after separation, and the impact that has on lump sum, is the crux of the question. Thanks!
This previous post was helpful,
Some of the Wealth Management companies have decent explanation of the pension calculation and impact of interest rates. This is not an endorsement, but try the ones below.
https://www.theretirementgroup.com/featured-article/exxonmobil-q4-lump-sum-payments-likely-to-fall-based-on-recent-rate-rises?
https://bogartwealth.com/video/discount-rates-exxonmobil-lump-sum-10-2020/