The discount rate only affects your Retirement Plan benefit if you are retirement eligible (age 50 with 10 years of vesting service), have a Legacy Formula benefit and are electing the optional lump sum form of benefit. As the discount rate decreases, your optional lump sum form of benefit increases.
The optional lump sum form of benefit is meant to be the “actuarial equivalent” of the annuity form of benefit. “Actuarial equivalent” means that the lump sum form of benefit is equal in value to the amount of monthly annuity payments you would receive if you elected the Single Life Annuity.
The discount rate is used to determine the optional lump sum form of benefit for the Legacy Formula of the Retirement Plan. In the Retirement Plan, the discount rate is the lesser of:
- the January Pension Benefit Guaranty Corporation (PBGC) immediate interest rate; or
- the PBGC immediate interest rate average for April through September of the preceding year.