Pension Calculator
Estimate future defined-benefit pension payout income based on years of service multiplier and final average salary.
Pension Payout Output
Frequently asked questions
How is defined benefit pension calculated?
Annual Pension = Years of Service × Accrual Multiplier Rate × Final Average Salary.
How is a defined benefit pension calculated?
Typically years of service x a multiplier x final or career-average salary. Twenty years at 1.5% of a $70,000 final salary gives $21,000 a year for life. The details - which salary is used, whether it is indexed, what survivor benefits apply - vary greatly between schemes and matter enormously.
What is the difference between defined benefit and defined contribution?
Defined benefit promises a specified income in retirement, with the employer carrying the investment and longevity risk. Defined contribution - a 401(k) or a UK workplace pension - promises only the contributions, leaving you to carry both risks. The shift from one to the other is the single biggest change in retirement provision in the last forty years.
Should I take a lump sum or a monthly pension?
A monthly pension protects against outliving your money and removes investment risk; a lump sum offers control, potential growth and something to leave to heirs. Compare the implied conversion rate against annuity pricing, and weigh your health, other income and the scheme's funding security. It is usually irreversible, so it warrants independent advice.