- Download Latest Version
- Request KeyCode
- Training Videos
- User Guides
- Tech Support
- Download Court Forms
- Modify Professional Listing
- Renew Subscription
Did You Know...
Family Law Software can calculate child support guideline amounts in 21 states.
|Search all help content:||
Question: How are Pension Present Value and pension payments coordinated?
Answer: We show the present value as an asset and the payments as income. In doing this, we are NOT double-counting, any more than one is double counting to show a bond as an asset and the income from the bond as income.
You can think of a pension as being just like a bond. Both make a series of payments over a period of time. The only difference is that the payments for the bond are fixed, and the payments for the pension are currently uncertain. (Coming to think of it, bond payments are also uncertain, actually, as holders of debt from Detroit, for example, have found out.)
But in both cases the anticipated stream of payments has a value today, and so both should be treated as assets.
The present value shows the value as of today. It is included in the asset reports. The payments show the retirement payments as they are made over time, and they are rightly recorded as income.
If, in spite of this truth, you wish for a pension value not to be included on the projected net worth report, there is an checkbox option on the "more info" page for the pension, which allows you to omit pension values from projected net worth reports.
You will note that the value of a pension as shown in the software tends to increase steadily from the present date to the date where pension payments begin. That's because the pension has a higher value the closer the recipient is to the date payments begin.
Once payments begin, the value of the pension declines steadily. That's because, with each passing year, there are fewer payments remaining in the future -- reducing the pension's asset value with each passing year.
In the software, the pension value declines at a steady rate. This is not the actual actuarial rate of decline, but it was too computationally intense to recalculate the actuarial value of the pension every year. So a steady decline approximates the actual decline in value.