Declining Interest Rates May Affect 2015 RS Plan Lump Sums

As your employees approach retirement age, they have important decisions to make. The end of the calendar year is a particularly busy period for Retirement Security (RS) Plan administration, with many participants who are eligible to retire or quasi-retire asking questions and requesting RS Plan benefit projections.

Throughout 2014, there has been a decline in interest rates that may result in higher lump sums in 2015. This is the normal result of interest rate fluctuations in any defined benefit plan and is not unique to the RS Plan.

To help you and your employees obtain more accurate benefit projections for 2015, the factors in our record-keeping systems will be updated, effective November 7, 2014, to be more in line with the expected 2015 rates, which are released in mid-December.

Interest rate changes will not affect any of the annuity options under the RS Plan.

PIRC representatives can help
These interest rate fluctuations may be causing some concern among prospective retirees and you may be receiving requests for guidance from your employees. Remember that you can refer them to NRECA’s Personal Investment & Retirement Consulting (PIRC) team for professional retirement planning guidance. PIRC team members offer such guidance at no additional cost to co-op employees.

Benefit projections
Benefits administrators have the ability to run RS Plan benefit projections online for employees via NRECA’s Employee Benefits website. BAs and participants can also call the Member Contact Center (866.673.2299, option 8) and request a projection.

Other resources
An educational flier, “The Answers You Need, Weighing Your RS Plan Payment Options,” is available for you to share with employees who are trying to determine if they should retire in 2014 or 2015. This flier discusses all benefit options in the RS Plan, including a broad selection of annuity choices, and describes how lump sums are calculated and how fluctuations in interest rates can affect lump sum values. The flier also reminds employees to review their overall financial readiness before making final decisions about retiring.