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 our attached 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 official interest rates used to calculate your pension for the months listed. The bottom row contains Capstone Wealth Advisors’ estimate of where we are forecasting rates for the various future dates listed.
What You Need to Know:
- Interest Rates used to calculate your BP RAP pension came in almost exactly with our forecasted estimates from last month. This impacts BP Retirees selecting January 1st as your Benefit Commencement Date. For October’s interest rate forecast, we anticipate rates to rise significantly across the board.
- What Does this Mean for You? If you’re a BP employee planning retirement soon, keep a close eye on the impact of falling interest rates on your pension lump-sum values. While next month’s rates are expected to increase vs last month, rates over the next 12 months are expected to drop. The Fed initiated a rate cut in September 2024, and another cut of 0.25% is widely anticipated on November 7th, affecting the lump sum’s potential value. However, delaying your pension collection doesn’t impact your BP retirement eligibility, so postponing could be a beneficial option if rates continue to trend lower. Reach out to our advisors to evaluate how these changes might affect your BP RAP and broader retirement goals.
- Why Have Rate Expectations Shifted? Economic indicators suggest slowing labor markets alongside sustained economic growth, with GDP and consumer spending remaining strong. Inflation is moderating, but the Fed remains cautious about declaring it under control. Fed Chair Powell described this phase as “calibration,” meaning the Fed will carefully balance inflation risks with economic stability rather than committing to rapid rate cuts. As of October 2024, the federal funds target rate is set at 4.75% – 5%, with no guaranteed timeline for additional cuts.
- What’s Next? The Fed’s rate path is less predictable, with future cuts anticipated but likely gradual. Projections suggest the federal funds rate could be around 3.5%–3.75% by late 2024 or mid-2025, though actual timing will depend on forthcoming economic data. BP employees and retirees should remain vigilant, as rate shifts can have a significant impact on pension valuations and retirement plans.
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.
Best wishes,
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.
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