[Altavia]

Originally Posted by Rainger99

This is interesting. I called my employer today and they told me that all of my options will go DOWN if I don’t take it by December 1. I assumed that the lump sum and all of the other options were invested and paying some interest on a daily or monthly basis.

So I get more money if I cash out now rather than waiting until end of year!

The woman in HR couldn’t explain why it would go down but said it would go down!

How do Interest Rates Affect Pensions? | Miramontes Capital

If interest rates are low, a lump sum pay out looks rewarding, even better than an annuity from a big company. In short, when interest rates are high, lump sums shrink. If they are low, lump sums grow.

Because of this, some choose to retire early when they see the interest rates begin to creep up. This may not be a bad idea if one is close to retirement age with a low chance of being able to see interest rates lower again.

In the current interest rate environment, generally, every one percentage point rise in interest rate reduces a lump sum’s value by 10% to 15%. For example, if your lump sum payout is $500,000, a one percentage point rise in interest rates could lower the amount by $75,000. Also, typically every $1 of pension income translates to about $140 of lump sum payment. If your monthly pension payout is about $1,500 a month, your lump-sum would be about $210,000.


Inflation And Pension Lump Sums: Timing Is Everything