How Rising Interest Rates Can Impact Your Pension

As the Federal Reserve has been increasing interest rates to combat inflation, there have been several obvious effects on the economy. New loan rates for the purchase of cars and home mortgages have gone up and, in many cases, have doubled from where they were just 18 months ago. On the other hand, interest rates paid to savers have crept up as well, putting more money back in their pockets.

One area not quite as apparent to everyone is the shift in valuations for the lump sums associated with pension plans. After all, defined benefit plans are not nearly as common of a retirement tool as they were years ago. According to the Bureau of Labor Statistics, only 15% of private industry workers have access to defined benefit plans.