Company-Specific Retirement Planning
Mar 16, 2023

February 2023 Chevron Segment Rate Summary

This monthly newsletter aims to track the interest rates that calculate the lump sum in the Chevron Retirement Plan and give an estimate of how it might affect your retirement benefit.

February Segment Rate Summary

The segment rates for February are 4.99%, 5.12%, and 4.96%. This brings the three-month average to 4.86%, 5.08%, and 4.88% for a May 2023 benefit start date. For Chevron employees hired before 2008, we estimate the lump sum benefit to increase about 0.7% for an average vested 65-year-old in May versus April, though please check your benefit calculator for your actual calculation.

All three segment rates rose in February, breaking the “front-heavy” rate pattern that increases the probability of a lump sum increase. The estimated lump sum still increased because the new February rates are lower than the November rates that fell out of the three-month segment rate average. Since the front-heavy pattern is broken, whether the lump sum increases or decreases will depend largely on the March segment rates.

To read more about how to spot patterns in the segment rates to predict movement in the lump sum, including back-heavy and front-heavy patterns, please visit the updated link below.

Front and Back-Heavy Rate Patterns

How Does this Affect Me?

The Chevron Retirement Plan offers a substantial benefit to Chevron employees over many other companies’ plans. It is one of the few remaining retirement pension plans that still offers a lump sum benefit. Since the Pension Protection Act of 2006, the calculation of the lump sum has become more complicated now relying on corporate bond yield curves, known as segment rates, instead of the 30-year treasury rate that was used in the past. In a low interest rate environment, it is important for Chevron employees to understand how their lump sum is calculated and how quickly the benefit can change. As interest rates lower, the lump sum increases, and vice-versa. If rates increase 1% across the board, it could lower your lump sum by almost 10% depending on your age and length of service.  This calculation applies only to Chevron employees hired before January 1, 2008.

Baird Retirement Management provides highly specialized retirement planning expertise for business professionals nearing retirement. Our perspectives are backed by our extensive experience, comprehensive industry knowledge and immersion in the latest retirement, income, and tax planning strategies. By focusing on select companies and industries, we can tailor our retirement planning advice to help meet the specialized planning needs and considerations of employees within a company or industry.

"Perspective and expertise from specialists who understand retirement planning and, more importantly, the specific situations you're in."

The PL Group from Baird Retirement Management has not been hired by Chevron and is not affiliated with Chevron in any fashion.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirement.

Robert W. Baird & Co. Incorporated. 777 East Wisconsin Avenue, Milwaukee, WI 53202. 800-RW-BAIRD. MC-38536.


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