The new interest rates for the Continental Retirement Plan (CARP) are now available on Your Benefits Resources. Those who may run an estimate with a benefit commencement date between 1/1/2020 – 6/1/2020 will have these new rates applied.  This information may affect when employees decide to take their retirement distribution, if retirement eligible.

A participant in the Continental Retirement Plan (CARP) may chose how to collect a benefit when meeting the Plan’s criteria to retire.  One of the payment options that may be chosen for consideration is a one-time, lump sum payment.

A lump sum is a present-day value of the stream of monthly annuity payments you could expect to receive during your retirement. As a Flight Attendant in CARP, you may elect a lump sum payment when you retire from United Airlines

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
• Assumptions set by the Internal Revenue Service (IRS).

The assumptions made by the IRS include an annual mortality table which is used to estimate remaining lifetime as well as segmented interest rates to convert the annuity payments that would be paid in the future into present-day value lump sum.

The interest rates for lump sums payable from CARP 1/1/2020 to 6/30/2020 are:

These are based on the IRS published three “segmented” interest rates each month.  The Plan specifies that United use these rates.   United will use the August rates published in early September 2019.     

The first segment rate is used to determine the present-day value of the stream of monthly payments that would be made during the next five (5) years; the second rate is used to determine the present-day value of the stream of monthly payments that would be made from 5 – 20 years; the third rate is used to determine the present-day value of the stream of monthly payments that would be made more that twenty (20) years into the future.  Your lump sum is the sum of these three values.

As a result, lump sums paid in the first half of 2020 will be significantly higherthan the lump sums paid in the second half of 2019. The following are estimated impacts:

CARP --- A lump sum of $100,000 based on the rates and mortality table for the second half of 2019 would be equal to the following amounts using the rates and mortality table for the first half of 2020:

Age 50 retiree = $123,000 (23.0% higher)

Age 55 retiree = $119,000 (19.0% higher)

Age 60 retiree = $115,000 (15.0% higher)

Age 65 retiree = $110,000 (10.0% higher)

These new rates are posted on the Alight (formerly Aon Hewitt) website as of October 1^stand employees are able to run estimates after that date.  

The actual table for July – December 2020 will be published by the IRS in March 2020 using February 2020 rates and Your Benefits Resources (YBR) should be updated for running these new estimates as of April 2020.  Those looking toward retirement with a benefit commencement date of July 1, 2020 or later should note that the interest rates that are used to project in the future will be using a 60-month average of the segmented rates from September 2014 to August 2019, which may or may not be reflective of current segmented rates.  Since the actual interest rates for these projections are currently unknown,the system could also show estimated lump sum amounts using three segment rates that are each 0.5% or 1.0% higher or lower than the 60-month average rates.  The actual interest rates that will be used to calculate your lump sum when you retire will be based on the interest rates in effect at that time.  

In estimate what these rates may be in the future, the following chart uses an average of the segmented rates during the 60-month period from September 2014 – August 2019.  The segments rates for running estimates effective July 1, 2020 and later are based on the following: