Financial Living Blog

Corporate rate changes will affect AT&T pension payouts

Dec 16, 2015 8:54:05 AM

3.68% corporate rate will lower lump sum pension payouts for AT&T employees in 2016

AT&T corporate bond rate increaseAs a trusted financial adviser to many AT&T employees and retirees, we wanted to inform you about recent interest rate changes that will affect your pension payout. If you are planning to retire soon, please review this important information.

In November, the interest rate used to calculate AT&T’s pension payouts – the Composite Corporate Bond Rate – was raised to 3.68%. Small changes in the interest rate will impact the size of your lump sum pension.

How recent rate changes may affect you:

  • Your lump sum pension will likely decrease. When interest rates rise, lump sum distributions fall.
  • If you retire in 2015: you will likely receive the highest lump sum payout possible
  • If you retire in 2016: you will likely receive a lower lump sum payout

The impact of higher interest rates:

If your lump sum in 2015 is: Your approximate lump sum in 2016:
$300,000 $291,000
$400,000 $388,000
$500,000 $485,000
$600,000 $582,000

How does this impact your retirement plan?

Your pension is an important income source for retirement. These changes may affect your decision whether to retire early, or to take an annuity or a lump sum payout at retirement. However, it is only one part of your overall financial picture. There are many more factors to consider before you decide – and we’re here to help.

But, time is short. With the rate change so close to the end of the year, you only have a few weeks to make a decision. Please reach out to us today.

If you have any questions about your pension or would like us to help you build a sound retirement plan, please contact us to arrange a meeting or telephone conversation.


 

Financial adviser Dan McHugh discusses how the rate change may affect managers and union employees further in this video:

AT&T Corporate Rate Changes for 2016

 

Investment advisory services are provided by Advance Capital Management, Inc. Brokerage services may be provided by Advance Capital Services, Inc., an affiliated company. Both companies are collectively referred to as “Advance Capital.” 

    
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