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DB Pension vs Commuted Value Calculator
How to use this calculator: Use this calculator to compare a lifetime defined benefit pension with a user-entered commuted value offer. It does not calculate the official commuted value itself. Enter pension amounts, the offered commuted value, life expectancy, tax, indexation, bridge benefit, and return assumptions.
How this calculator helps
Compare pension income with a commuted value scenario
This calculator is for reviewing a defined benefit pension offer beside a commuted value or transfer value. It keeps the comparison educational: you enter the pension amount, the offered commuted value, tax-sheltered transfer amount, taxable excess assumptions, return assumptions, indexation, bridge benefit, life expectancy and survivor settings.
What to gather before using it
- the annual or monthly DB pension amount from the pension option statement;
- the commuted value or transfer value offered by the plan;
- any maximum tax-sheltered transfer amount and estimated taxable excess;
- indexation, bridge benefit, survivor benefit and guarantee-period details;
- a return assumption and planning horizon for testing the transferred-value scenario.
What it does not calculate
The tool does not estimate the official commuted value, confirm pension rights, apply plan-specific locking rules, calculate exact tax, or decide whether commuting a pension is suitable. Use it to explore the moving parts before reviewing the plan documents, tax treatment and family implications in more detail.
Common questions before opening it
- Does this calculate the official commuted value?
- No. Enter the commuted value or transfer value supplied by the pension plan, administrator, actuary, or another qualified source.
- Can it model the taxable excess?
- Only in simplified form. If you enter a maximum tax-sheltered transfer amount and RRSP room, the calculator estimates how much capital remains investable after the assumed tax on any excess.
- Is the result a recommendation?
- No. The result is an educational comparison of income, transfer-value, tax and survivor assumptions. Plan documents and professional review may still be needed.
For the broader framework, read DB Pension or Commuted Value: How to Compare the Choice.