What if I have an employer statement of value that differs from the pension calculation?
“Statements of value” from employers are almost always different than true actuarial pension value. They are usually lower than the true actuarial value. You can use the employer’s statement if: It is higher than our value (which is rare), and the employer is actually offering to buy the pension out for the stated value; or […]
I am going to testify in court about the pension valuation.
Here are some things you might want to be comfortable about before taking the stand: 1. Interest rate. This is a user entry, although the software will suggest a current 20-year Treasury Bill rate as of the date the pension is first entered into the software. The link below shows 20 year treasury bill rates […]
What should I assume with respect to how long the participant will work, and when she will retire?
Let’s look at the hypothetical case of a state trooper who has been working 10 years. His accrued pension benefit is $2,500 a month. If he works another 10 years, is accrued pension benefit will be $4,500 a month. He is 52 years old and seems likely to work until regular retirement at age 62. […]
For a pension evaluation, can I get a life expectancy table customized to my client?
We do not have any way of using a police or firefighter-specific life expectancy table. Nor for a smoker. Nor for a skydiver. Nor for someone who is black, white, or Asian. Nor for someone who has diabetes or heart disease. Nor for someone who is known to be in particularly good health, or bad […]
Why is the pension income not correct?
There are several reasons why the income from a defined benefit pension plan that you see on the Budget Report may not be what you expect. 1. There may not have been any pension allocation between the parties. In order for the software to know how to carry the pension payments, you must specify how […]
How can I enter a military pension?
There is a certain amount of computation involved in determining the monthly benefit for a military pension. Click here for an overview of the military pension benefit. Once the benefit has been determined, though, the military pension may be just like any other defined benefit pension. Specifically, to the extent that the pension is a […]
How can I tell if my pension valuation is right?
Here’s how you can get a ballpark sense of whether the result you are getting from the defined-benefit pension calculator is correct. Let’s assume the following facts: Pension will pay $2,000 per month at retirement Pension will start to pay when client is age 65. Client is a male, and is 50 years old today. […]
Do you calculate defined benefit pension valuations for joint lives (survivorships)?
Currently, we calculate defined benefit pension valuations for single lives only. Typically, the survivor piece is not worth all that much, because: – It begins to run far in the future, at which point the discounting to the present is substantial; and – It typically runs only for a few years, from the time the […]
How are pension present value (valuation) and pension payments coordinated?
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 […]
What do you assume to be the life expectancy, or age of death, or mortality, of the pension plan participant?
The software does not use a single life expectancy / mortality / age of death assumption. Instead, it does a much more sophisticated analysis in which the present value of each year’s payment is calculated. You can see that calculation if you scroll to the bottom of the "more info" screen for the pension, and […]