If your pension payout uses the IRS "segment" rates the calculation is complex with a bunch of moving parts. Normally if the calculation uses the IRS "segment" rates the three (or more) rates will be identified in your estimate letter. The moving parts include the monthly benefit (which is reduced a little for each month you receive it before the full pension month). Another moving part is the number of months in each of the interest rate segments (these change as you age and the mortality table factors change). Of course the factor causing the most meaningful changes is how the segment values are impacted by the interest rate curve.
Be aware that not all of an apparent change in a lump-sum is due to interest rates. As you age the monthly benefit goes up but the number of likely payments goes down.
Of course if interest rates go up the lump-sum alternative could diminish.
Interest rates seem to be on a rising trend. If you are less than 5 years away from the age for an unreduced pension I would suggest taking it immediately.
Be mindful of the exact month the interest rate changes apply to your pension calculation and the exact date you must act to take advantage of better rates if rates move against you.
Be aware that not all of an apparent change in a lump-sum is due to interest rates. As you age the monthly benefit goes up but the number of likely payments goes down.
Of course if interest rates go up the lump-sum alternative could diminish.
Interest rates seem to be on a rising trend. If you are less than 5 years away from the age for an unreduced pension I would suggest taking it immediately.
Be mindful of the exact month the interest rate changes apply to your pension calculation and the exact date you must act to take advantage of better rates if rates move against you.
Statistics: Posted by 123 — Wed Oct 29, 2025 9:14 pm — Replies 11 — Views 666