Pension Present Value Calculator
Enter your expected monthly pension payment, an assumed interest rate (discount rate), and how long you expect to receive payments (e.g. life expectancy). We estimate the present value (lump sum) of that stream.
Present value of pension
Enter values to calculate.
How it works
Present value of an annuity: PV = Pmt × [1 − (1+r)^(−n)] / r, where Pmt is the monthly payment, r is the monthly discount rate, and n is the number of months. A lower discount rate gives a higher PV.
When to use it
Use it to compare a pension offer to a lump sum, to see the value of delaying pension start, or to plan for a pension in net worth.
Frequently asked questions
What discount rate should I use?
Often a conservative rate (e.g. 3–5%) to reflect the safety of the pension. Higher rate = lower PV.
What about inflation?
This assumes level payments. If the pension has COLA, the value is higher; we don't model that here.