With interest rates on the rise, many Chevron employees are asking themselves “Am I working for free?”.
If retirement is on the horizon for you, choosing the right month to commence benefits could be trickier than it seems.
We break down how segment rates work, how they affect your lump-sum payment and why the timing of your retirement is so important.Â
Our Chevron financial planners have over 20 years of experience helping Chevron employees navigate their retirement and get the most out of their benefits package.
The IRS has posted updated Min Present Value Segment Rates for the month of March 2025. They are as follows:
First Segment
4.50
Second Segment
5.33
Third Segment
5.86
First Segment
Decrease of 0.15
Second Segment
Decrease of 0.05
Third Segment
Increase of 0.05
The IRS publishes a table of Minimum Present Value Segment Rates here: https://www.irs.gov/Retirement-Plans/Minimum-Present-Value-Segment-Rates
Based on the 3-month average that the CRP uses (December, January, February) the Segment Rates for June 2025 retirement are:
First Segment
4.63
Second Segment
5.42
Third Segment
5.863
First Segment
Decrease of 0.05
Second Segment
Increase of 0.017
Third Segment
Increase of 0.077
The newly published IRS rates will be factored into the 3-month average used for the CRP lump sum calculation for Chevron employees who wish to take the CRP lump sum in June 2025.
The following table demonstrates the hypothetical* impact of recent IRS segment rate updates to the lump sum value for a 65-year-old Chevron employee with an estimated single-life annuity payment of $7,500 month:
If a Chevron employee is debating May 2025 or June 2025Â as their benefit commencement date, based solely on the lump sum value of the CRP, May would be the better of the 2 months. The approximate decrease in the CRP value for a June retirement in this hypothetical scenario would be about -0.19%
While your CRP Lump Sum or your pension is not only based on interest rates, looking at recent rates over time can give you an idea of how your lump sum will be affected, and help you when you are choosing the best retirement date. Remember that interest rates have an inverse relationship with a lump sum pension, so as interest rates increase, lump sum pension value decreases.Â
*Due to the individual nature of the actual CRP lump sum calculation, you would need to run the estimator to determine the true impact to your value.
Note: Guidance for Standard Deduction, Earned Income Credit, and Reduced Refunds can be found on the IRS website.
The IRS determines minimum present value segment rates based on corporate bond yields. These rates are published monthly and help define the discount rates used to calculate pension liabilities and lump-sum payouts.
Interest rates can be categorized into:
If you would like to speak with a Financial Advisor in San Ramon, CA or Houston, TX about how segment rates can affect your unique situation, please fill out the form below and a team member will be in touch shortly.
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