Financial Intel Monthly

Interest rates are trending upward, and if this trend continues ExxonMobil lump-sum payments will drop again in the fourth quarter of this year. The IRS has recently released the Segment rates for the month of April, recorded at: 3.00% / 4.22% / 4.17%. April's segment rates saw an increase of about 0.5% (in the second segment), which is a substantial jump for a single month.  This ongoing trend upward looks to be an early indicator of bad news for ExxonMobil employees opting for a lump-sum in the future.

What is it? 

In today's corporate environment, cost cutting, restructuring, and downsizing are the norm.  We have found many employers are offering their employees early retirement packages. As you near retirement age, you may find yourself confronted with an early retirement offer from PG&E. PG&E may refer to the offer as an early out package or retirement offer or golden handshake or a golden parachute. While many early retirement offers seem attractive at first, it is important for you to review an offer carefully before accepting it to ensure that it is indeed a "golden" opportunity.

Details of the PG&E 2022 VSP:

Participation in the VSP is voluntary and offers the following benefits:

• Lump sum payment equal to 52 weeks of your base salary.
  
• $10,000 transitional lump sum payment.
  
• $50,000 retiree medical subsidy to your Retiree Health Account (RHA).
  
• Prorated 2022 STIP (Short Term Incentive Plan), consistent with Company’s overall STIP program. Participants understand STIP is a discretionary at-risk compensation program.

Typical elements of an early retirement offer
IAn early retirement offer usually consists of severance payments and post-retirement medical coverage coupled with already existing retirement benefits.  These may be in the form of healthcare financial incentives or a severance tied to years of service. 

Interest rates are tending upward, if this trend continues it will decrease the value of ExxonMobil employees' pension lump-sums. The IRS has recently released the Segment rates for the month of March, recorded at: 2.44% / 3.71% / 3.94%. Over the course of 2021 and now into 2022, interest rates at ExxonMobil increased significantly, which greatly reduced many lump sum payments. With record low rates culminating in the first quarter of 2021, ExxonMobil employees have since seen a significant increase in interest rates. We saw rates rise consistently in 2021 and with the announcement of March segment rates those waiting until the third quarter will likely see an even further reduction in lump sums. This ongoing trend upward looks be an early indicator of bad news for ExxonMobil employees opting for a lump-sum in the future.

The Markets (as of market close May 20, 2022)

Interest rates are tending upward, if this trend continues it will decrease the value of ExxonMobil employees' pension lump-sums. The IRS has recently released the Segment rates for the month of February, recorded at: 1.88% / 3.35% / 3.70%. Over the course of 2021 and now into 2022, interest rates at ExxonMobil increased significantly, which greatly reduced many lump sum payments. With record low rates culminating in the first quarter of 2021, ExxonMobil employees have since seen a significant increase in interest rates. We saw rates rise consistently in 2021 and with the announcement of February segment rates those waiting until the third quarter will likely see an even further reduction in lump sums. This recent trend upward looks be an early indicator of bad news for ExxonMobil employees opting for a lump-sum in the future.

Interest rates are tending upward, if this trend continues it will decrease the value of ExxonMobil employees' pension lump-sums. The IRS has recently released the Segment rates for the month of January, recorded at: 1.41% / 3.02% / 3.36%. Over the course of 2021 and now into 2022, interest rates at ExxonMobil increased significantly, which greatly reduced many lump sum payments. With record low rates culminating in the first quarter of 2021, ExxonMobil employees have since seen a significant increase in interest rates. We saw rates rise consistently in 2021 and with the announcement of January segment rates those retiring in the second quarter will see an even further reduction in lump sums. This recent trend upward looks be an early indicator of bad news for ExxonMobil employees opting for a lump-sum in the future.

In November 2021, Congress passed the Infrastructure Investment and Jobs Act, a roughly $1 trillion package that reauthorized existing programs and provided more than $550 billion in new funding over the next five years to help upgrade aging U.S. transportation, water, power generation, and communication systems.¹ The American Society of Civil Engineers applauded the bipartisan legislation, calling it a significant down payment on the $2.5 trillion in deficiencies identified in the industry group's 2021 Report Card for America's Infrastructure.²

Interest rates are tending upward, if this trend continues it will decrease the value of ExxonMobil employees' pension lump-sums. The IRS has recently released the Segment rates for the month of December, recorded at: 1.16% / 2.72% / 3.10%. Over the course of 2021, interest rates at ExxonMobil increased significantly, which greatly reduced many lump sum payments. With record low rates culminating in the first quarter of 2021, ExxonMobil employees have since seen a significant increase in interest rates. We saw rates rise consistently in 2021 and with the announcement of December segment rates those retiring in the second quarter will see an even further reduction in lump sums. This recent trend upward might be an early indicator of bad news for ExxonMobil employees opting for a lump-sum.

For ExxonMobil employees, it is crucial to understand how interest rates can impact your lump-sum particularly those who live in Texas.

While monthly interest rates are trending upward, quarter over quarter blended rates actually fell from Q4 2021 to Q1 2022. If the broader trend of rising interest rates continues it will decrease the value of ExxonMobil employees' pension lump-sums, but for Q1 2022 employees should actually see their lump-sum amounts increase. The IRS has recently released the Segment rates for the month of September, recorded at: 0.7% / 2.55% / 3.06%. Over the course of 2021, interest rates at ExxonMobil increased significantly, which greatly reduced many lump sum payments. With record low rates culminating in the first quarter of 2021, ExxonMobil employees have since seen a significant increase in interest rates. We saw an increase in rates for the second, third, and fourth quarters of 2021 in the second segment, and now first quarter rates for 2022 have dropped slightly. Rates fell roughly 0.24% in the second segment, in the last quarter. The short term rates have experienced a slight increase, while the long term rates decreased significantly by 0.34%. Even though blended rates for the second quarter of 2022 will not be known until the end of December, month over month increases in segment rates may be an early indicator of bad news for ExxonMobil employees opting for a lump-sum.

This article is important to you considering your experience at AT&T as an employee. 

Many people ask about ways to stay afloat while they’re in-between jobs. What people fail to realize is oftentimes the steps you take before leaving your current job can be even more crucial. Here are a few tips to consider before leaving AT&T.