Obviously, I’m a data nerd. Add to that being a money data nerd, and I’m out looking at my pension estimate every October and December.

Why am I looking at my pension estimate at those two time frames?

In November every year, my employer re-assesses the interest rates, and locks in a new interest rate number for the next 12 months. This interest rate is used to calculate the lump sum of the pension that’s considered actuarially neutral verses the other pension payout options you also have to choose from (various annuitizations).

• If the current interest rate environment goes down, the lump sum value goes up
• If the current interest rate environment goes up, the lump sum value goes down

(Note that interest rates often have nothing to do with stock returns.)

So specifically since the last reassessment at the end of 2019, with interest rates having gone down, lump sum valuations have gone up.

Checking mine, the difference of two more months of work (minor) plus the updated interest rate effects from 2020 (more substantial) means that my December lump sump calculation went up by a five-digit number! That would be an awful lot more to roll over into my 403b, to grow for the next couple decades.

Now remember, the interest rates are re-assessed and locked in for the next 12 months, every November. These are the really favorable-for-lump-sum-valuation levels that will be in effect if you separate from service any time between now and November 2021. If interest rates rise in 2021, it could be a costly mistake to retire in December 2021 instead of October 2021.

If you haven’t already, make sure to read my other two articles on pension lump sums, about whether you should cash out your pension as a lump sum vs taking the annuity, and about pension basics.