Impact of 2023 Interest Rates on RS Plan Single Cash Payment Estimates

Beginning in late March, most Retirement Security (RS) Plan participants will receive their annual benefit statements. Individuals with more involved or complex benefit calculations will receive their statements in subsequent weeks. Viewing these statements is a good way for participants to track this valuable benefit and plan for their income in retirement.

RS Plan participants will generally notice a decrease in the 2023 dollar figures associated with the estimated amounts of their benefit as a single cash payment as compared to 2022. For individuals at or near their normal retirement age, the typical 2023 single cash payment amount decreased by 25%. Individuals earlier in their career could see larger decreases. The reason for this decrease is the interest rates used to calculate the RS Plan benefit as a single cash payment nearly doubled from 2022 to 2023. Typically, when interest rates go up, the value of a single cash payment goes down. And the opposite is true when interest rates decrease.

Decreases are in single cash payment estimates only
A participant’s earned RS Plan benefit hasn’t decreased in value. The plan’s default benefit payment method, a guaranteed monthly annuity, is not impacted by annual interest rates and otherwise remains unchanged.

Employee resources for your use
NRECA recognizes the 2023 RS Plan benefit statements may cause concern with many participants and has developed resources to assist you in addressing these concerns. The Financial Power RS newsletter that accompanies the annual statements will have a lead article providing an explanation as well as ways to view and better understand the RS Plan benefit.

If you wish to provide your co-op’s RS Plan participants with information about their upcoming benefit statements and the decrease in the estimated single cash payment figures from 2022 to 2023, we have prepared language that you could use in an email message, on your co-op’s intranet or in an upcoming employee newsletter. The language is similar to what participants will receive with the newsletter accompanying their annual benefit statement.

Additional questions
For participant questions, members of NRECA’s Personal Investment & Retirement Consulting (PIRC) team are available Monday through Friday, 7:30 am to 4 pm, to review a participant’s benefit and address specific concerns. If you have any additional questions, please reach out to your field representative.