Healthcare Provider Update: Intel's Healthcare Provider and Upcoming Costs Intel primarily utilizes benefits through various healthcare providers, with many employees accessing plans from major insurers like UnitedHealthcare, Anthem Blue Cross Blue Shield, and others depending on geographical region and specific plan offerings. As we look ahead to 2026, healthcare costs are anticipated to rise significantly, potentially impacting Intel employees and their families. With ACA premium hikes exceeding 60% in some states and the expiration of enhanced federal subsidies looming, many individuals could see their premiums increase by over 75%. Additionally, a rising trend in medical expenses, driven by inflation and supply chain challenges, coupled with escalating pharmaceutical costs, threatens to further strain household budgets. Consequently, these developments necessitate strategic planning by Intel employees to alleviate the financial burden associated with healthcare coverage in the coming year. Click here to learn more
| Company Name | For plan years beginning in | Year | Month | First Segment | Second Segment | Third Segment | Plan Type |
| Intel | All | 2024 | May | 5.18% | 5.41% | 5.62% | |
| Intel | All | 2023 | May | 4.91% | 5.15% | 5.34% |
Interest rates are heading in the wrong direction for Intel employees who are considering the lump sum option on their pension payment. Interest rates hit a record low for individuals that commence their benefits in October of 2020 but have ticked up for those commencing their benefits in November. Over the last year, interest rates have dropped dramatically which has greatly increased many lump sum payments. However, if interest rates begin to climb many people's lump-sum payments could decrease. Should you desire to take your pension as a lump sum, Intel will use interest rates and your age to calculate your lump sum payment. When interest rates move up or down, your pension lump sum amount will move in an inverse relationship.
Your pension is 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 are used to determine your single life annuity. All other forms of pension payments are based on this figure.
Intel Pension Lump Sum Calculation:
When Intel employees elect the month they would like to begin their pension, Intel looks back two months to calculate the rate used for the pension disbursement.
For example, if you are planning to retire and start your pension in November 2020, Intel would use the rates available in September 2020 (two months prior to your month of retirement). This table shows each month and their rates as they stand today:
Intel Segment Rates for December 2020:
September-20
0.51
For a December 2020 pension commencement date, you will use the October segmented rates.
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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.
Because the annuity is discounted based on mortality as well as interest rates, 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.
This methodology essentially means that there will be a unique monthly interest rate (lump-sum
conversion factor) for each year and month of birth.
How Do Rate Changes Affect Your Intel Pension?
Because pension pricing is based on interest calculations, making a slight adjustment in your retirement date may have a significant financial impact on your pension due to changing rates each month.
Everything else held equal, a lower interest rate will produce a higher 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%.
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The changes from just June 2020 to September 2020 may account for a 1% - 3% increase in lump sums. However, if you look at where rates were in September 2019, they have come down quite a bit. For September 2019, the blended rates were 2.13 / 3.07 / 3.65. That is a drop of 0.76% in the 2nd segment which tends to have the strongest effect. A drop of 0.76% from September 2019 to September 2020 may have caused your pension to rise by 7% - 9%. For someone with a $500,000 lump sum, that could mean a move of as much as $45,000. For a $1,000,000 lump sum, it would be roughly $70,000 to $90,000. Going forward, if rates start to move back up, you could see your pension lump sum start to drop. The rates are updated monthly, so you have month to month options to commence your pension once you have retired. You do not have to commence your pension as soon as you retire. You have the option to defer it. That may be beneficial if rates are dropping and/or you are under 60 years old. If you take your pension prior to age 60 there are age penalties and you will not receive 100% of your pension benefit.
Given the current interest rate environment, it is highly suggested you discuss your 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 the pension annuity may be a better fit no matter how attractive the
pension lump sum may be. Every situation is unique, and a cash flow analysis will allow you to
compare all pension options.
How does the Intel Pension Plan define the eligibility criteria for employees looking to retire, and what specific steps must they take to determine their benefit under the Intel Pension Plan?
Eligibility Criteria for Retirement: To be eligible for the Intel Pension Plan, employees must meet specific criteria, such as age and years of service. Benefits are calculated based on final average pay and years of service, and employees can determine their benefits by logging into their Fidelity NetBenefits account, where they can view their projected monthly benefit and explore different retirement dates(Intel_Pension_Plan_Dece…).
What are the implications of choosing between a lump-sum distribution and a monthly income from the Intel Pension Plan, and how can employees assess which option is best suited for their individual financial circumstances?
Lump-Sum vs. Monthly Income: Choosing between a lump-sum distribution and monthly income under the Intel Pension Plan depends on personal financial goals. A lump-sum provides flexibility but exposes retirees to market risk, while monthly payments offer consistent income. Employees should consider factors like their financial needs, life expectancy, and risk tolerance when deciding which option fits their situation(Intel_Pension_Plan_Dece…).
In what ways can changes in interest rates affect the lump-sum benefit calculation under the Intel Pension Plan, and why is it essential for employees to be proactive about their retirement planning concerning these fluctuations?
Interest Rates and Lump-Sum Calculations: Interest rates directly affect the lump-sum calculation, as higher rates reduce the present value of future payments, leading to a smaller lump-sum benefit. Therefore, it's crucial for employees to monitor interest rate trends when planning their retirement to avoid potential reductions in their lump-sum payout(Intel_Pension_Plan_Dece…).
How do factors like final average pay and years of service impact the pension benefits calculated under the Intel Pension Plan, and what resources are available for employees to estimate their potential benefits?
Impact of Final Average Pay and Years of Service: Pension benefits under the Intel Pension Plan are calculated using final average pay (highest-earning years) and years of service. Employees can use available tools, such as the Fidelity NetBenefits calculator, to estimate their potential pension based on these factors, giving them a clearer picture of their retirement income(Intel_Pension_Plan_Dece…).
How should employees approach their financial planning in light of their Intel Pension Plan benefits, and what role does risk tolerance play in deciding between a lump-sum payment and monthly income?
Financial Planning and Risk Tolerance: Employees should incorporate their pension plan benefits into broader financial planning. Those with a lower risk tolerance might prefer the steady income of monthly payments, while individuals willing to take investment risks might opt for the lump-sum payout. Balancing these decisions with other income sources is vital(Intel_Pension_Plan_Dece…).
What considerations should Intel employees evaluate regarding healthcare and insurance needs when transitioning into retirement, based on the guidelines established by the Intel Pension Plan?
Healthcare and Insurance Needs: Intel employees approaching retirement should carefully evaluate their healthcare options, including Medicare eligibility, private insurance, and the use of their SERMA accounts. Considering how healthcare costs fit into their retirement budget is crucial, as these costs will likely increase over time(Intel_Pension_Plan_Dece…).
How can employees maximize their benefits from the Intel Pension Plan by understanding the minimum pension benefit provision, and what steps can they take if their Retirement Contribution account falls short?
Maximizing Benefits with the Minimum Pension Provision: Employees can maximize their pension benefits by understanding the minimum pension benefit provision, which ensures that retirees receive a certain income even if their Retirement Contribution (RC) account balance is insufficient. Those whose RC accounts fall short will receive a benefit from the Minimum Pension Plan (MPP)(Intel_Pension_Plan_Dece…).
What resources does Intel offer to support employees in their retirement transition, including assessment tools and financial planning services tailored to those benefiting from the Intel Pension Plan?
Resources for Retirement Transition: Intel provides several resources to support employees' transition into retirement, including financial planning tools and access to Fidelity's retirement calculators. Employees can use these tools to run scenarios and determine the most beneficial pension options based on their financial goals(Intel_Pension_Plan_Dece…).
What strategies can retirees implement to manage taxes effectively when receiving payments from the Intel Pension Plan, and how do these strategies vary between lump-sum distributions and monthly income options?
Tax Strategies for Pension Payments: Managing taxes on pension payments requires strategic planning. Lump-sum distributions are often subject to immediate taxation, while monthly income is taxed as regular income. Retirees can explore tax-deferred accounts and other strategies to minimize their tax burden(Intel_Pension_Plan_Dece…).
How can employees of Intel contact Human Resources to get personalized assistance with their pension questions or concerns regarding the Intel Pension Plan, and what specific information should they be prepared to provide during this communication?
Contacting HR for Pension Assistance: Intel employees seeking assistance with their pension plan can contact HR for personalized support. It is recommended that they have their employee ID, retirement dates, and specific pension-related questions ready to expedite the process. HR can guide them through benefit calculations and options(Intel_Pension_Plan_Dece…).
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