2017 Interest Rate

Attention all Edison Employees:

The Edison pension is a large component of your retirement assets. Its value is tied to the August segment interest rates the IRS announces each September. This may impact your retirement decision and Manchester Financial can guide you to the optimal retirement date.

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EIX Interest Rate Update

Segment rates are used to calculate Edison’s Grandfathered and Cash Balance Lump-Sums. These rates are a blend of corporate bond rates and the 30 year US Treasury Bond rate.

Final Numbers - 3rd Segment: 4.98%, 2nd Segment: 4.05%, 1st Segment: 1.68%

These are standard rates published monthly on the IRS website. Edison will use the August 2016 rates to calculate all pensions in 2017. Grandfathered Plan participants benefit from lower interest rates and Cash Balance Plan participants benefit from higher interest rates.

Edison Pension Interest Rates 2017 - chart
(Click to open image in a new window)

3rd Segment
4.18%
The Grandfathered Plan uses this rate to calculate the present value of the annuity beyond 20 years. The Cash Balance Plan uses this rate as the 2017 interest rate credit.
2nd Segment
3.27%
The Grandfathered Plan uses this rate to calculate the present value of years 5 to 20 of the annuity. The Cash Balance Plan is not affected by this rate.
1st Segment
1.39%
The Grandfathered Plan uses this rate to calculate the present value of the first 5 years of the annuity. The Cash Balance Plan is not affected by this rate.
Grandfathered Lump-Sum Participants
The value of a Grandfathered Lump-Sum is inversely related to the segment interest rates. The decrease of the 2017 segment rates will increase the value of your Lump-Sum distribution if your benefit commencement is in 2017.  

Cash Balance Participants
Edison uses the 3rd Segment Rate as the interest rate credit for Cash Balance Plans. Unlike the Grandfathered Plan, Cash Balance Plans always increase in value. This rate decreased from 4.98% to 4.18%, so Cash Balance Plans will grow slightly slower in 2017.

When should you retire?

Retirement should always be based on your goals and overall resources. It should never strictly be based on the change in value of your Lump-Sum amount.

Please reach out to Manchester Financial to run a complementary retirement projection. We will integrate your Lump-Sum and annuity payments into your projection so you can choose the option that best fits your needs.

If you're leaving Edison in the next year, time is short and we're here to help you analyze your options. Our Financial Planners will quickly pull together a personalized, detailed plan that clearly lays out your choices so you have the clarity to make your best decisions. Many of your choices are one-time only and cannot be changed. Our Expert Advisors will show you how to maximize your Edison benefits. We've guided hundreds of your colleagues over the past 25 years and look forward to helping you.

 

Manchester Financial is focused on protecting and improving the lives of our clients by providing you with savvy financial planning and astute portfolio management.

Please contact us today for a free consultation!

 

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Manchester Financial is neither affiliated with Edison International nor is this information sponsored by Edison International.

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