2024 Interest Rate Announcement and Impact to RS Plan Benefits

Retirement Security (RS) Plan benefits paid as a single cash payment are variable year over year, with interest rates playing a large part in determining the value of a participant’s final benefit paid in that manner. Typically, RS Plan benefits paid as an annuity are not impacted by interest rate changes.

2024 interest rate impacts
As interest rates rise, the value of benefits paid as single cash payments will decline. Conversely, as longer-term interest rates decrease, single cash payment amounts will increase. RS Plan benefits paid as single cash payments in 2023 are based on interest rates determined in mid-December 2022 when interest rates were lower than they are currently. If these interest rates follow the pattern of higher rates seen over the past several months, in most cases, a single cash distribution paid in 2024 will be less valuable than an equivalent one paid in 2023. We strongly encourage benefit administrators to run or re-run benefit estimates after interest rates are announced in mid-December.

Benefit estimates allow for comparison
RS Plan benefit estimates are a great way to help your cooperative’s employees understand how this valuable benefit fits into their overall retirement planning. And, for employees contemplating retirement dates at the end of 2023 or in early 2024, benefit estimates are even more important in our current interest rate environment. Use this flier, “Answers You Need: Weighing Your RS Plan Payment Options,” to provide your co-op’s participants with high-level information on how interest rates may impact certain benefit distribution decisions.

Resources
RS Plan benefit estimates can be run on the NRECA Employee Benefits website: cooperative.com > My Benefits > Co-op Retirement > RS Plan Estimates. Additionally, participants needing help evaluating their options should be directed to NRECA’s PIRC team at 866.673.2299, option 6 or pirc@nreca.coop. PIRC team members are available Monday through Friday, 7:30 a.m. to 4 p.m. Central time.