RAP/Pension InterestRate Chart October 2021

BP Employees,

September’s interest rates, which impact retirees collecting their BP RAP benefits on January 1st, 2022, were in-line with our projection that rates would remain essentially flat through January 2022. We are however forecasting rates will begin moving higher in the months ahead.

Despite current strains on our economy (supply shortages, increased inflation, labor shortages, etc.) there is a high likelihood interest rates will begin moving visibly higher in the coming months assuming no major change in the current economic situation.  This means BP “Heritage” Employees approaching retirement should strongly consider what impact interest rate increases will have on your pension due to the inverse relationship interest rates have on your pension’s lump sum value.

As discussed in last month’s email, the Federal Reserve recently announced its intention to begin reducing the level of bonds it has been buying in reaction to their belief that massive levels of stimulus are becoming decreasingly necessary to maintain stability in financial markets.  When the new policy is eventually implemented, it should reduce the demand on bonds, likely causing bond prices to move lower and rates to go higher.

We would encourage clients to keep your focus on the fundamental reason why the Fed is preparing to take this next step – our economy is currently doing quite well.  Yes, there are issues in our economy that, if left unmitigated, could lead to significant problems down the road. Current levels of inflation as well as supply chain logjams are the two most notable topics of concern, but conditions will need to get substantially worse before there is a detrimental impact on our economy. We believe there is still ample time for these issues to be resolved without pushing our economy into a recession.

If you are considering retiring or separating from BP in the near future, we strongly recommend you contact our dedicated team of BP Employee Retirement Specialists. We can help you understand how and when to collect your pension benefits. This service is free of charge for all BP Employees and Retirees.

To schedule a complimentary consultation with our team email info@capstonewealthadvisors.com or call us directly at (877)739-6007.

Regards,

Capstone Wealth Advisors

Bellingham, WA

877-739-6007

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Stock investing involves risk, including loss of principal. International & Emerging Markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in Emerging Markets.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

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