BMEP100

Anyone know what the L-Cal A fund lump sum interest rate reset dates are?

I know it’s twice a year but can’t remember which months.

Floyd

I bet you can find your answer on Ualpilotsforum.info

BMEP100

Nope, not there.

flap

From the Benefits Book:
The interest rates used in calculating lump sums are based on a corporate bond yield curve. The corporate bond yield curve interest rates used consist of three “segment” rates. The first segment rate is used to discount annuity payments that would be made in the next 5 years. The second segment rate is used to discount annuity payments that would be made in the following 15 years (years 6 through 20). And the third segment rate is used to discount annuity payments that would be made thereafter (years 21 and beyond). Since these segment rates are used to discount the future Life Annuity benefit stream, higher interest rates produce lower lump sums and lower interest rates produce higher lump sums.
Pilots with last day of employment from June 1 through November 30 who complete their retirement paperwork in a timely manner and elect a benefit commencement date of July 1 through December 1 have their lump sum benefit based on the segment rates from the month of February of that calendar year.
Pilots with last day of employment from December 1 through May 31 who complete their retirement paperwork in a timely manner and elect a benefit commencement date of January 1 through June 1 have their lump sum benefit based on segment rates from the month of August of the prior calendar year.
The lump sum conversion factors are calculated based on the pilot’s age on the benefit commencement date elected by the pilot.

BMEP100

So sounds like February and August. Do you, or anyone know where the calculated (blended) rate is published for those two periods, and when the new rates are published?

I may, depending on the published rate, leave the money alone for a few months, after I retire if the next rate is going to drop.

flap

This was sent out:

Attention Legacy CAL Pilots: If you are a participant in the Continental Retirement Plan (CARP) or the Continental Pilots Retirement Plan (CPRP), you may choose among multiple benefit options when you meet either Plan’s criteria to retire. One payment option you may choose to consider is a one-time, lump sum payment.

If you plan on retiring in 2019 and have not yet taken your benefit, it is important to understand that lump sums are expected to be slightly higher during the second half of 2019 than they are in the first half of 2019. Please read below for more information.

Background

A lump sum is the present value of the stream of monthly annuity payments you could have expected to receive during your retirement had you elected to receive your benefit in the form of an annuity. As a participant in the CARP or CPRP, you may elect a lump sum payment when you retire from United at:

Age 50 with at least 20 years of vesting service, or

Age 55 with at least 10 years of vesting service, or

Age 65 (Age 60 for pilots)

The amount of your lump sum will be determined by many factors, including the amount of your monthly annuity benefit, your age when you collect, and the mortality and interest assumptions set by the Internal Revenue Service (IRS). The mortality assumption is determined using a mortality table that estimates your remaining lifetime. The interest assumption is determined using segmented interest rates to convert the annuity payments that would be paid in the future into a present value lump sum.

Mortality Table: The IRS specifies a new mortality table each year.

Segmented Interest Rates: The IRS publishes three “segmented” interest rates each month. CARP and CPRP specify that the company must use these published rates.

The IRS segmented interest rates for lump sums payable between 1/1/2019 and 6/30/2019 are 3.10%, 4.15% and 4.46%. The segmented rates declined for the second half of 2019 (3.01%, 4.11%, 4.41%), and as a result, if all other factors are constant, lump sums will be slightly higher during the second half of 2019 compared to the first half of the year.

The following example illustrates the difference between taking a lump sum in the first half of 2019 and taking a lump sum in the second half of 2019:

Assume that your CPRP lump sum would be $600,000 based on the rates for the first half of 2019. If instead you took the lump sum in the second half of 2019, your lump sum would be equal to the following amounts (be advised the following amounts are for illustration, and your results will differ from what is shown below):

Age 50 retiree = $605,569 (.93% increase)

Age 55 retiree = $604,120 (.69% increase)

Age 60 retiree = $602,974 (.50% increase)

Age 65 retiree = $602,620 (.44% increase)

The Retirement and Insurance Committee is supplying you with this information so that you may make an educated decision regarding the date you take a CPRP lump sum, if you plan on taking that benefit form instead of an annuity. If you are retiring this year and plan on taking the lump sum option, you might want to consider delaying taking the lump sum until July to take advantage of the lower interest rates and corresponding increase to the lump sum benefit.

The earliest you can receive your CPRP benefits is the first of the month following your retirement. However, there is no requirement to take the benefit at that time and you may delay it if you choose. Also be advised, that checks from the CPRP trust are only cut on certain days of the week, so there could be up to a week delay for check processing.

There is a CPRP lump sum calculator available on the YBR section of Flying Together to assist you with your decision. The calculator will model different annuity and lump sum payments for different dates you elect. The calculator should now be updated with the new interest rates.

BMEP100

Thanks,
When was that dated? I don’t remember seeing it. In any case I’d like to know how far in advance the rates are announced.