Interest rates for March (impacting July 2021 Benefit Commencement Dates) moved sharply higher for the third consecutive month. After several months of significant increases in corporate rates, we anticipate the current pace to pause, providing those of you who are retiring later this year the possibility of relief from the massive swings affecting your pensions value.
As mentioned in last month’s email, the large movements in rates are mostly due to strengthened economic conditions in the US as we emerge from COVID related restrictions on businesses and personal activities. Overall economic strength is likely to continue due to large government spending programs and the potential of additional spending bills passed, the most notable is aimed at infrastructure spending. It is likely that interest rates already reflect the expectation of future spending programs, but the final passage of any spending bills will ultimately dictate where the numbers finalize out at.
There has been a lot of discussion in the media lately about the threat of hyperinflation on the horizon due to the massive levels of government spending currently taking place. While in theory this argument may sound viable, the actual situation is far more complex than what is being touted in the media. In reality, the probability we will see inflation hitting levels which pose a threat to our economic stability is low and not something we are concerned with in the near term. We see a more likely picture that inflation will increase in a sustainable manner and will continue well into next year. The Federal Reserve has significant measures that can be taken to control inflation should it begin to get above targeted levels by the Fed.
For BP Employees looking to separate from the company this year, we reiterate the importance of you understanding how interest rates affect your pension’s value. Failing to properly understand how and when to file for your pension can cost you a significant amount of lost money simply by selecting the wrong month. Heritage Employees will see a more substantial swing in the value of your pension as interest rates rise vs Non-Heritage Employees.
At Capstone Wealth Advisors, one of our unique specialties is understanding the inner workings of your BP Retirement Plans and how to make the optimal decision when it comes to filing for your benefits. To schedule a complimentary consultation with one of our experienced advisors simply email us at email@example.com or call us at (877)739-6007.
Tyler E Ryan
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