Thank you for your question. According to Benzinga, ExxonMobil lump-sums will drop significantly for those who retiring in Q3 or Q4 of 2022. ExxonMobil interest rates for employees retiring in the fourth quarter of this year are 3.44 (first segment), 4.70 (second segment), and 4.74 (third segment) for non-grandfathered employees. An increase of over 1.1% in the second segment could cause an 11% reduction in an employee's lump-sum. For reference the ExxonMobil interest rates for those retiring in Q2 2022 are 1.09, 2.72, and 3.09. Employees who were not at least 63 years old with at least 23 years of ExxonMobil service by December 31st, 2020, are not grandfathered into the old pension calculation method, and they use the interest rates listed above.

Grandfathered employees were at least 63 years old with at least 23 years of ExxonMobil service by December 31, 2020. Grandfathered employees use the old pension calculation method. This calculation utilizes the 30-year Treasury bond interest rates. The rate for employees retiring in Q4 is 3%, a 0.75% increase from Q3. While this is less drastic than the increase that the non-grandfathered employees will experience, this will still account for approximately a 7.5% decrease in lump-sum values. This means that a person with a $1 million lump-sum could expect to lose about $75,000 by retiring in July instead of June 2022. A non-grandfathered employee could expect to lose $110,000 under the same circumstances.

When interest rates increase or decrease, pension lump-sum payments will shift in an inverse manner. An individual’s pension is aggregated based on the date they concluded employment and the date they commenced their benefits. As for one’s benefit calculation, it’s a defined benefit that’s established by length of employment, as well as your total average wage. These things, along with your Social Security Offset, can be used to generate your single life annuity. Various structures of pension amounts are also determined from this figure. However, if a retiree wants to claim their pension as a lump-sum, then the company will take interest rates and the retiree’s age into account to compute their final lump-sum amount.