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Lump Sum Calculation Assumptions for CARP (CPRP)

Date: February 14, 2023

Lump Sum Calculation Assumptions for CARP (CPRP)
MEC Benefits Committee

United’s standard method of projecting lump sum future values has always been done using the 60-month average of the corporate bond rates. This standard methodology to project lump sum future values has resulted in higher estimated lump sum benefits than will be calculated at the time of commencement.

CARP (CPRP) participants may have noticed that due to the recent market conditions and the unprecedented fluctuations in corporate bond rates and because corporate bond rates have been historically low, using the 60-month average will likely produce higher lump sum values than may actually be payable for retirements 7/1/2023 and later.

In order to address the impact of the changes occurring in the market, United consulted with their actuarial firm and has decided to change the methodology used to project future dated lump sums values in an effort to align the estimation with what will really be paid. United will change the calculation to use the greater of the average of the last 24-months interest rates or the latest published lump sum rate under the Plan. This change will be reflected in the estimator tool as of February 9, 2023. Additional information on this change is available on our website.

If you have questions about this change, please open a Help Hub case.

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