As discussed in last month’s pension email, we called for bond rates to fall substantially as the current market sell-off on Wall St. continued. That certainly ended up being the case; falling to levels our bond markets have never seen before. Since your BP Pension (RAP) is inversely tied to interest rates, falling rates have been one area of providing much needed positive news for those retiring in the coming months.

While February’s interest rate figures (affecting June 1st benefit commencement dates) have fallen noticeably, we are calling for a further decline in March. This means July will likely be the best month to take your pension lump sum. Please note this will only affect those of you who are collecting your pension on July 1st. If you currently have a benefit commencement date scheduled for a month earlier than July, we strongly recommend you contact us to assist you in correcting the elected date.

Some clients have asked us whether we see rates staying low past March – the answer is partially yes and no. Earlier this month the Federal Government announced a massive stimulus program aimed at propping up our economy and there has been significant speculation that additional stimulus measures will be needed to keep our economy up and running. Since the announcement, interest rates have risen off their lows and have fluctuated back and forth depending on the day and news coming out of Washington DC. The 30-year Treasury Rate hit an all-time low of 0.93% on March 9th before it subsequently bounced off those levels. Since then, we have seen 30-year rates hold steadily above 1% and we would expect rates to remain above those levels subsequent months. While rates will likely remain relatively low, it is unlikely that all segments will remain at their all-time lows established on March 9th.

What does all of this mean for you? Well, if you are retiring or separating from BP before July, this is good news for your pension, but if you are working longer – maybe several years longer – this will likely have little impact to you when you retire.

As this situation has illustrated, having an advisory team with a deep knowledge and understanding of your pension and other BP retirement plans can help save you from making costly mistakes. Our team at Capstone Wealth Advisors are dedicated to providing that service to you and your co-workers. We have specialized in the BP Retirement Plan for more than 15 years. Our consultations are free of charge.

If you would like assistance with how this could affect you, please email tyler@capstonewealthadvisors.com or call our office directly at (877)739-6007 to have one of our BP Retirement Plan Specialists assist you with determining how expected changes in interest rates may impact you.

Tyler E Ryan


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