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Information regarding the lump-sum payout may or may not apply to specific employees based on factors such as mergers, acquisitions, years of service, age, or the date an employee was hired.

While The Retirement Group is not associated with your company, our goal is to supplement the information you receive from your HR department. This should not be looked at as a substitute for your HR department, but instead as additional information which may help you plan for retirement.

Chevron Lump Sums Experiencing Serious Drops, as Interest Rates Continue to Soar

Company Name For plan years beginning in Year Month First Segment Second Segment Third Segment Plan Type
Chevron All 2023 October 5.77% 6.14% 6.19%
Chevron All 2022 October 5.1% 5.83% 5.68%

Many Chevron employees who are waiting to commence their pension lump-sums, will now see a significant decrease in their value. September’s segment rates accounted for the biggest month to month increase ever, and now October’s segment rates increased again. 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 January of 2023. This is because when Chevron employees elect the month they would like to begin their pension, Chevron looks back at the third, fourth, and fifth months' rates to calculate 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.

Large increases in interest rates are important if you decide to take the lump-sum option since the calculation for your lump-sum is based on interest rates and your age. Your pension will be calculated based on your last date of employment and benefit start date. The benefit calculation is a defined benefit based on your years of service and final average pay. These, along with a Social Security Offset are used to determine your single life annuity. All other forms of pension payments are based on this figure.

If you are planning to retire and start your pension in January 2023, Chevron would use the blended rate available through October 2022 (three months prior to your month of retirement). This example shows three months of rates and how they are blended to determine your rates for various segments of your pension.

For a January 2023 pension commencement date, the average of October 2022, September 2022, and August 2022 rates comprise the blended rate.

For a December 2022 pension commencement date, the average of the September 2022, August 2022, and July 2022 rates comprise the blended rate.

For a November 2022 pension commencement date, the average of August 2022, July 2022, and June 2022 rates comprise the blended rate.

For lump-sum conversions, the annuity is discounted to a present value using the first segment rate for the first five years of expected payments, the second segment rate for the next 15 years of expected payments, and the third segment rate for all years of expected payments over 20.

The annuity is also discounted based on mortality, meaning the present value of each monthly payment reduces as the probability of living to receive each payment reduces. The older you are when you commence your pension benefit, the fewer the number of years that will be valued using the third segment rate (20+ years) and, conversely, the younger you are, the greater the number of years that will be valued using the third segment rate.

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This methodology essentially means that there will be a unique monthly interest rate (lump-sum conversion factor) for each year and month of birth.

Pension pricing is based on interest calculations, which means an adjustment in your retirement date may lead to avoiding a serious financial hit, due to avoiding months with high-interest rates.

The blended rates for January rates are: 5.10% / 5.83% / 5.68%. December are: 3.98%/ 4.85%/ 4.83%. November rates are: 3.70% / 4.70%/ 4.73%.

Everything else held equal, a higher interest rate will produce a lower lump sum. The exact changes depend on your specific age, but on average a 1% change in rates can equate to an 8% to 12% change in lump sums. So, on average, a 1% change could increase or decrease your pension lump sum by roughly 10%.

The changes from just September 2022 to January 2022 may account for a 7% decrease in lump sums, as the second segment rates have seen a significant increase. For September 2022, the blended rates were 3.29 / 4.54 / 4.55. The January 2022 blended rate is 0.7% higher in the 2nd segment which tends to have the strongest effect. For someone with a $500,000 lump sum, that could mean a move of as much as $35,000. For a $1,000,000 lump sum, it would be roughly $70,000. Interest rates have been trending upward for most of 2022, so if rates increase again by 1% you could see another 8 - 12% reduction in your lump-sum. These rates are updated monthly, so every month you have options to commence your pension. It's important to note that you don't have to commence your pension immediately after you retire. If you wish to delay your commencement, you have the ability to defer it until a later date. Also, please be aware that if you decide to take your pension before the age of 60, there will be age penalties that prevent you from collecting 100% of your pension.

Given the current interest rate environment, we highly suggest Chevron employees residing in the US discuss their options with The Retirement Group and allow us to monitor the rates and keep you up to date on the monthly changes. We can provide a complimentary cash flow analysis to show you how various retirement dates may play out.

It is important to remember that every situation is unique and that by getting a cash flow analysis you'll be able to compare different types of pensions and find the best fit for your situation

The Retirement Group is not affiliated with nor endorsed by Chevron. We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or FSC Securities provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Securities through FSC Securities Corporation, member FINRA/SIPC and investment advisory services offered through The Retirement Group, LLC, a registered investment advisor not affiliated with FSC Securities Corporation. Office of Supervisor Jurisdiction: 5414 Oberlin Dr #220, San Diego CA 92121. 800900-5867

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Full Interest Rate update table for Chevron employees

Company Name For plan years beginning in Year Month First Segment Second Segment Third Segment Plan Name
Chevron All 2023 October 5.77% 6.14% 6.19%
Chevron All 2023 September 5.58% 5.66% 5.56%
Chevron All 2023 August 5.45% 5.52% 5.43%
Chevron All 2023 July 5.35% 5.28% 5.1%
Chevron All 2023 June 5.26% 5.23% 5.16%
Chevron All 2023 May 4.91% 5.15% 5.34%
Chevron All 2023 April 4.77% 4.97% 5.13%
Chevron All 2023 March 5% 5.2% 5.15%
Chevron All 2023 February 4.99% 5.12% 4.96%
Chevron All 2023 January 4.74% 4.98% 4.84%
Chevron All 2022 December 4.84% 5.15% 4.85%
Chevron All 2022 November 5.09% 5.6% 5.41%
Chevron All 2022 October 5.1% 5.83% 5.68%
Chevron All 2022 September 4.48% 5.26% 5.07%
Chevron All 2022 August 3.79% 4.62% 4.69%
Chevron All 2022 July 3.67% 4.67% 4.73%
Chevron All 2022 June 3.64% 4.8% 4.78%
Chevron All 2022 May 3.23% 4.59% 4.69%
Chevron All 2022 April 3% 4.22% 4.17%
Chevron All 2022 March 2.44% 3.71% 3.94%
Chevron All 2022 February 1.88% 3.35% 3.7%
Chevron All 2022 January 1.41% 3.02% 3.36%
Chevron All 2021 December 1.16% 2.72% 3.1%
Chevron All 2021 November 1.02% 2.72% 3.08%

For more information you can reach the plan administrator for Chevron at 6001 bollinger canyon road San Ramon, CA 94583; or by calling them at 713-372-4335.

Disclaimer: Securities offered through Osaic Wealth, Inc, member FINRA/SIPC. Investment advisory services offered through The Retirement Group, LLC. a registered investment advisor not affiliated with Osaic Wealth, Inc. *We are not affiliated with or endorsed by Chevron. This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the intended recipient. Any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately and (ii) destroy all copies of this message. The Retirement Group, LLC is registered to conduct advisory business in the following states: AZ, CA, CO, FL, ID, IL, IN, LA, MI, MS, MO, NE, NV, NJ, NY, NC, OK, OR, SD, TX, UT, VA, WA. Through Osaic Wealth, Inc, we have advisors securities licensed in the following states: AK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MI, MN, MO, MS, MT, NC, ND, NE, NJ, NM, NV, NY, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, VT, WA, WI, WY.

Office of Supervisory Jurisdiction: 5414 Oberlin Dr #220, San Diego CA 92121 800.900.5867 || Fax: 866.936.0750


Plan Administrator:
6001 bollinger canyon road
San Ramon, CA

*Please see disclaimer for more information