So if you are still sitting on a pension you should know that the PBGC rate has just dropped from a historic low of .50% to 0.00%. I left at the end of June on VSP and every month my lump sum goes up as the interest rate drops but can’t for the life of me figure out what a 0% interest rate does to the lump sum calculation?
25 replies (most recent on top)
Who is looking at the lump sum tomorrow, we should see latest rate cut, this is gonna be great!!!!
The PBGC rate for calculating your pension is based upon the middle month of the quarter prior. If the PBGC rate drops to 0% in Nov that will be used for the Jan/Feb/March calculations.
The rate in the 3rd quarter was 1.0, 4th quarter (oct,nov,dec) it dropped to .5, and it will drop to 0.0% in January. I believe (but am not 100% sure) that you can wait to take your lump sum after January 1st when the rate drops to zero....even if your off payroll date is December 31st. Check with a financial planner who is familiar with Verizon retirees to be sure.
When would 0.0 rate take effect? , every rate drop (like one in June), takes place 10/1 on lump sum calculator, does fed rate drop take place after announced and begins following quarter, or specified date? Just wondering if at 0.0, which takes effect 11/1 I believe, if it would bump lump sum that day, or following quarter in January...TX
There are two reasons that a person might still be working past 65....they have to or they want to. Either way, it is their choice. How do you berate someone for working? They are not taking anything from you. I just don't get it. People get to do what they want with their lives.
Wireless=no technician
Wireline= technician
What does 5G home indicate?
…………………………….……… NOTHING! Your working for the same amount you'd make sitting at home including your max Social
so you're pretty much sticking around for...………………………………………………………………………………...
I do not know how old all you people are, but, at the age of 65 Verizon freezes your pension. They don't put any money into it.
How do I know? I'm 67 still working with Verizon, at 65 they sent me a notice stating this. My pension has not haven't grew at all!!! So you ask why I'm still working.. I have 23 years now and I am hoping for an EISP
"I don't want to sound ignorant but does that mean I would get it a zero if I left in October? You had said off payroll by Dec 31st. Thanks Again"
You can retire anytime by 12/31 to get the 1/1 commencement rate of 0.0. You can retire today, tomorrow, Oct, Nov, etc, just as long as it's by 12/31. And you have to commence your pension, it's not automatic just because you retired. I left in June, but holding out longer and longer because the pbgc rate keeps dropping.
Your pension is the higher dollar amount between the GATT Rate and the PBGC rate from the middle month of the quarter prior. Jan/Feb/Mar 2020 pension is based on the Nov 2919 PBCG Rate and the current GATT rate, whatever the higher dollar amount.
I don't want to sound ignorant but does that mean I would get it a zero if I left in October? You had said off payroll by Dec 31st. Thanks Again
The PBGC 0.00% is for January 2020 pension commencement, so must be off payroll by Dec 31st
Question. If I retire at the end of October will I get the Pbgc of .50 or Zero. Thanks
As for losing $2K a month.... I left in June ... was one of the many reasons I choose the VSP. I havent taken the lump sum yet..... cause every .25 decrease gives me an additional $23,000 into the lump sum. so now I am thinking I cash out in January with 0 on the PBGC. I have a new job, same money, less vacation, slightly better medical and the people are very nice. Job is less political than Verizon has morphed into. I miss my VZ buddies but not the politics ,,, I will never have to be directed by VLSS ever again.
All we need now is a buyout to cash in
The system doesn't work when using 0.0, however it does work with .1, which will show you it goes up. Wait until 10/1 and do the lump sum estimator 3 month view, and you will see your Jan 1 commencement will be higher. But hold on for the new PBGC rate on 10/15 & Nov 15, it's possible it could become a negative, because it's based off Corporate Bond rate.
The 0% was from the Corporate Bond Rate from August, so it's possible may go negative. These are historic numbers, everyone who didn't take the VSP and are kicking themselves, should consider this historic pension increase. Rough estimate, for every quarter point decrease in PBGC, lump goes up approx 4%. That means an 8% increase from the .50 rate drop to 0.
My understanding is the current rate drop, takes effect 4thQ.. nondiffernve ( much) with leaving January or feb.. from October my lump goes up nearly 10% compared from if I left today, and stays pretty much the same to may, and drops a few thousand. My assumption is if it takes place November, you will see a difference in site sometime in october, when calculations are done and would take effect 1st Q since it will reflect during 4th Q..so it's not in system yet
- just like this past drop, it took about a month to see it apply in system
@vod : he is still getting a salary , probably saving and stuffing money in the 401k . Even though the buyout might be going down , you are still making money .
I plugged in .05 and it went up 45k for Jan 2020
Your losing 2k a month and still working? That is crazy man.
I don't believe the pension estimator on Benefits Connection is working correctly at a zero rate. When I tested it with 0% PBGC with a February 2020 take date...the Lump Sum amount actually went Down by $4K between November 2019 @.50% and February 2020 @ 0%. I typically lose $2K per month due to getting older so that accounts for the $4K so it doesn't appear the calculator recognizes the 0%. I sent a message to the Contact team but have yet to receive a reply. If I hear anything (unlikely) I will post the reply.
Zero percent interest rate makes the lump sum calculation easy - take the the monthly pension $ amount and multiply by the # of months between retirement date & life expectancy - because the rate is 0%, there is no discount to calculate.
No idea...last I checked (last week), it still showed .50% pbgc. Maybe they will update it soon. I know when the rate went from 1.0% to .50%, my lump sum went up a lot!
I thought this poster might be trolling so I went on the PBGC website and checked. The 0% rate is correct. Wow, Anybody know when this newest interest rate will be reflected in the lump sum amount given at benefits connection?