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Rising Interest Rates Change the Math on Pensions for Some Would-Be Retirees

Higher interest rates are good for our cash and checking accounts but are not always good for pension holders. Rising interest rates have an inverse relationship to a pension’s lump-sum value. As interest ates increase, the value of a pension holder’s lump sum could decrease. Because of this, I am seeing more pension holders who want to take a lump sum do so now vs. waiting

I am also seeing annuity rates improve with rising interest rates, pushing annuity income potentially higher than pension income (see chart below). There is much to consider if you are a current pension holder. Let’s review.

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