ATTN BP Employees,

Updated interest rates that impact your BP Pension (BP RAP) have been released. For a clear understanding of these changing rates, please find attached our interest rate chart detailing the current interest rates influencing your BP RAP and our predictions for where they may head in the future.  The top row contains the current interest rates used to calculate your pension for the months listed.  The bottom row contains Capstone Wealth Advisors’ estimate of where we forecast rates going to for the various future dates listed.

What You Need to Know:

  1. Interest Rates used to calculate your BP RAP pension were closely in line with our forecasted estimates last month. This impacts BP Retirees selecting September 1st as your Benefit Commencement Date. For June, we anticipate rates will move slightly lower.

 

  1. What Does this Mean for You? BP Employees looking to retire in 2024 will likely benefit by waiting to collect their pension until the second half of 2024 or later when interest rates are more likely to drop. It is important to note that waiting to file for your pension does not impact when you can retire from BP, you can file to collect your pension at any time post separation from BP. We strongly encourage you to speak with one of our experienced financial advisors to discuss the impact these rates could have on your BP RAP and your overall retirement goals. We can help you understand the best option for your long-term retirement planning needs.

 

  1. Why Are Rates Remaining So High? “Inflation has eased over the past year but remains elevated,” Powell said following the Fed’s June meeting. In other words, “it ain’t over ‘til it’s over.” The Fed wants to see more progress towards its 2% inflation objective before considering any changes to monetary policy. Recall that just a few months ago, the Fed seemed prepared to cut rates three times in 2024. However, an uptick in inflation in Q1 forced them to revise their outlook. At the June meeting, Fed officials anticipate cutting short-term interest rates just once later this year.

 

  1. What’s Next? Fed policymakers have indicated that while the pace of rate hikes may slow, the current high-interest-rate environment is likely to persist longer than previously anticipated. Chair Jerome Powell emphasized the need for continued vigilance until there is stronger evidence of inflation moving towards the 2% target. The Fed is now taking a more cautious approach, suggesting that any rate cuts will be gradual and data dependent. This cautious stance is echoed by other Fed officials who have expressed concerns about the underlying strength of inflationary pressures. Consequently, the likelihood of significant rate reductions in the near term remains low.

Need Some Guidance?

Don’t worry if this all feels confusing, we’re here to help! Our team of financial advisors is well-versed in all things related to BP retirement plans. Whether it is the BP RAP, ESP, SVP, RRSP, or any other BP-related plans, we have you covered.

Want to learn more? Simply email us at info@capstonewealthadvisors.com or give us a call at (877)739-6007.