One Number Worth Watching as Retirement Gets Closer

If you’re an Edison employee approaching retirement, there’s a number that changes every January 1st that can affect your pension quote and, depending on your situation, may be worth considering as you think about your retirement date.

The change comes from the interest rates used in the Southern California Edison Retirement Plan. Those rates reset each year, and for some employees, they can change the value of the pension options they’re comparing.

That doesn’t mean January 1st should determine when you retire. Retirement is a much bigger decision than any one rate or pension calculation. But if your timeline could reasonably fall on either side of the new year, it’s worth understanding what changes and whether it makes a meaningful difference for you.

We’ve helped many Edison employees work through retirement over the years, and we know how quickly the questions can add up. You don’t need to understand every detail of the pension plan to begin thinking through your options. 

What helps is knowing which details matter for you, and the January 1, 2027, change may be one of them.

What actually changes?

The Edison pension plan uses corporate bond interest rates published by the IRS to help calculate certain pension benefits. The plan looks at rates from the previous August and uses them for the following year. How that change affects you depends on the type of pension benefit you have and how you choose to receive it.

• If you have a cash balance pension and are considering monthly pension payments for life, higher interest rates generally result in a larger monthly payment.
• If you have a cash balance pension and are considering a lump sum, the interest-rate change does not affect the value in the same way. Your cash balance is your cash balance.

However, some longer-tenured Edison employees may have a different, grandfathered pension formula. For those employees, higher interest rates can have the opposite effect on a lump-sum calculation: higher rates generally mean a smaller lump sum.

If you don’t know which formula applies to you, that’s okay. You don’t need to become an expert on pension calculations. The important thing to understand is that the change can affect different pension options in different ways.

What could that mean in real dollars?

Based on the August 2026 IRS figures, the 2027 rate is expected to be 6.73%. Edison’s annual notice should confirm the rates that will apply for 2027.

Percentages alone don’t tell you much about what that could mean for your retirement, so consider a simplified example:

Suppose an employee is 62 years old with a $500,000 cash balance and is considering a single-life monthly pension.

Using the 2026 rates, the monthly benefit might be approximately $3,570. At the expected 2027 rates, it might be approximately $3,710.

That’s a difference of about $140 per month.

This is only an illustration, not an Edison pension calculation. Your actual numbers will depend on your individual benefit and the option you choose. Edison’s EIX Benefits Connection modeler, found once you log into your Edison Benefits portal, can show you what the numbers look like for you.

The point isn’t that $140 should change your retirement date. It’s that if you’re already thinking about retiring near year-end, comparing the numbers on both sides of January 1st can help you see whether the difference matters to you and to your specific situation.

Your retirement date is about more than your pension

A larger pension number doesn’t automatically mean a better retirement date.

For example, if you were to move your pension start date from December 1st to January 1st, that generally means you would wait another month for the pension to begin. Depending on your situation, that could also mean another month of work and another paycheck.

Your pension is also only one part of your retirement income. Your 401(k), Social Security, other savings and investments, taxes, healthcare costs, family circumstances, and spending needs all play a role. That’s why we look at the pension decision as part of the larger retirement picture rather than as a decision to make on its own.

There are also timing requirements for when your employment ends, when your pension begins, and when your election must be submitted. You don’t need to memorize those rules. Edison’s materials can provide the specific dates that apply to you, and giving yourself some time to understand them can make the process much more manageable.

What about the lump sum versus a monthly pension?

For many Edison employees, looking at the January numbers brings up another important question: Should I take my pension as a lump sum or receive monthly income for life?

There isn’t one answer that works for everyone.

A monthly pension can provide a predictable income for life. A lump sum can provide more control and flexibility. Your health, other assets, family circumstances, spending needs, and personal preferences can all affect which option best fits your retirement.

The answer here isn’t simply to choose whichever pension option looks larger on paper. It’s about understanding what each choice would mean for the retirement you want to have.

You don’t need to sort through this alone

If you want help making sense of what you see when you run the modeler, we can help you look at those numbers in the context of your life, your priorities, and what you want retirement to look like.

We sometimes joke that we ourselves have retired from Edison a few hundred times by now. What we really mean is that we’ve sat beside many Edison employees through the paperwork, pension elections, conversations with HR, and the other steps that come with making retirement happen. We’ve seen how quickly a pension question can become a much bigger life question.

That’s where good planning helps. Not by handing you a one-size-fits-all answer, but by slowing things down, looking at the full picture, and helping you understand what each choice means for you.

Email us your two numbers from the modeler, along with any questions you have. We can use that as a starting point for an initial retirement plan at no cost, so you can get a clearer sense of where you stand and what deserves attention next.

 ^{Sherwood Financial Partners, LLC (“Sherwood”) is not affiliated with or endorsed by Southern California Edison or Edison International. This article is provided for educational purposes only and should not be considered individualized investment, tax or legal advice. Pension examples are hypothetical and are intended only to illustrate how changes in plan assumptions may affect benefit calculations. The pension examples do not reflect a portfolio or strategy managed by Sherwood. Employees should consult official Edison plan materials regarding their individual circumstances.}