Financial Intel Monthly

Many KP employees who are waiting to commence their pension lump-sums, are now seeing a significant decrease in their value. New segment rates have been released and there was a 0.3% increase in the second segment over the previous month. The second segment is the most impactful so if you have a pension of $1,000,000 you could see a reduction of about $30,000 simply by commencing your benefit in July as opposed to June. This is because when KP employees elect the month they would like to begin their pension, KP looks back two months to calculate the rates for the pension disbursement. When these interest rates move up or down, your lump sum amount will move in an inverse direction, so if interest rates increase, your lump sum amount will decrease and vice versa. Through the pandemic, interest rates dropped dramatically which greatly increased many lump sum payments. This trend culminated in record lows for individuals who commenced their benefits in December of 2020. However, since then this trend has shifted, as interest rates have been increasing rapidly, causing a large reduction in pension lump-sum values.

Many KP employees who are waiting to commence their pension lump-sums, are now seeing a significant decrease in their value. New segment rates have been released and there was a 0.5% increase in the second segment over the previous month. The second segment is the most impactful so if you have a pension of $1,000,000 you could see a reduction of about $50,000 simply by commencing your benefit in June as opposed to May. This is because when KP employees elect the month they would like to begin their pension, KP looks back two months to calculate the rates for the pension disbursement. When these interest rates move up or down, your lump sum amount will move in an inverse direction, so if interest rates increase, your lump sum amount will decrease and vice versa. Through the pandemic, interest rates dropped dramatically which greatly increased many lump sum payments. This trend culminated in record lows for individuals who commenced their benefits in December of 2020. However, since then this trend has shifted, as interest rates have been increasing rapidly, causing a large reduction in pension lump-sums values.

Many KP employees who are waiting to commence their pension lump-sums, are now seeing a significant decrease in their value. With short, medium, and long-term rates rising significantly over the last month, the higher average rates will result in lower lump-sums for those retiring in April of 2022. This is because when KP employees elect the month they would like to begin their pension, KP looks back two months to calculate the rates for the pension disbursement. When these interest rates move up or down, your lump sum amount will move in an inverse direction, so if interest rates increase, your lump sum amount will decrease and vice versa. Through the pandemic, interest rates dropped dramatically which greatly increased many lump sum payments. This trend culminated in record lows for individuals who commenced their benefits in December of 2020. However, since then this trend has shifted, as interest rates have been increasing rapidly, causing a large reduction in pension lump-sums values.

Lump-sums are decreasing for KP employees who wait to commence their pensions lump-sum.  With both short, medium, and long-term rates rising over the last month, the higher average rate will result in lower lump-sums for those retiring in March of 2022. When KP employees elect the month they would like to begin their pension, KP looks back to two months to calculate the rates used for the pension disbursement. When interest rates move up or down, your pension lump sum amount will move in an inverse relationship. Through the pandemic, interest rates dropped dramatically which has greatly increased many lump sum payments. However, rates have increased significantly over 2021 and 2022, causing a reduction in pension lump-sums.

Lump-sums are decreasing for KP employees who wait to commence their pensions lump-sum.  With both short, medium, and long-term rates rising over the last month, the higher average rate will result in lower lump-sums for those retiring in March of 2022. When KP employees elect the month they would like to begin their pension, KP looks back to two months to calculate the rates used for the pension disbursement. When interest rates move up or down, your pension lump sum amount will move in an inverse relationship. Through the pandemic, interest rates dropped dramatically which has greatly increased many lump sum payments. However, rates have increased significantly over 2021 and 2022, causing a reduction in pension lump-sums.

Those KP employees who delay receiving their pension lump sum receive a smaller amount. With short-, medium-, and long-term rates all increasing over the past month, the higher average rate will result in smaller lump settlements for March 2022 retirees. When KP employees select the month in which they would like to begin receiving their pension, the company looks back two months to determine the rates used to calculate the pension payout. When interest rates rise or fall, your pension total sum will move in the opposite direction. As a result of the pandemic, interest rates fell drastically, resulting in a significant increase in many lump-sum payments. In 2021 and 2022, however, rates have increased substantially, resulting in a reduction in pension lump sums.