Inputs
DB Pension vs Commuted Value Calculator
Before you start
This calculator compares three educational views of a DB pension and a user-provided commuted value. It does not calculate the official commuted value or decide what to do.
- Enter pension and transfer figures from your plan documents.
- Use sample values if you want to see the result layout first.
- Read the comparison framework
Do not have a pension statement handy? Load sample values to see how the comparison works.
Comparison results
Enter the pension and commuted value assumptions, then update the comparison. Slider changes refresh automatically after the first calculation.
Scenario comparison
DB pension vs commuted value
The figures below compare income streams using the assumptions entered above. They are educational estimates only.
Comparison view
Same pension income test
Uses the commuted value as if it withdraws the same gross DB pension amount through the selected horizon.
The table keeps the life-expectancy scenarios beside the compact result labels.
Comparison view
Maximum monthly income test
Tests the highest monthly amount the commuted value could support over the selected horizon, then compares that amount with the DB pension payment.
Annual comparison projection
Data table
Shows future-dollar DB pension income, matched commuted-value withdrawals, and estimated remaining balance using the current assumptions.
Comparison view
Simplified value-today test
Discounts projected after-tax DB pension payments back to today, then compares that value with the simplified after-tax commuted capital snapshot.
The table separates the value comparison from the simplified tax rates used to build it.
Data table
Maximum monthly income comparison
The table keeps the horizon visible so the monthly-income result is not read as a lifetime guarantee.
Methodology, assumptions, and limitations
- Source of pension values: Use pension amounts, commuted value, bridge benefit details, transfer limits, and related plan figures from the pension administrator, a qualified actuary, or another qualified source. This calculator does not estimate the official commuted value.
- Methods used here: The calculator uses simplified planning comparisons: a same pension income test, a maximum monthly income test, and a simplified value-today test. Different tests may point in different directions because they answer different questions.
- Main comparison: The same pension income test asks whether the commuted value could reproduce the DB pension payment stream by withdrawing the same gross pension amount each year. Because DB pension income and registered or locked-in withdrawals are generally taxable, this is a useful starting point; taxable excess, non-registered capital, and future tax-rate differences are handled only in simplified supporting views.
- Other comparison methods exist: Other valid review methods may include official actuarial transfer-value methods, annuity replacement comparisons, tax-net cash-flow analysis, longevity scenarios, survivor-benefit review, inflation protection, estate considerations, and liquidity or risk-transfer trade-offs. Those methods may require plan documents, market annuity quotes, detailed tax modelling, or professional actuarial review.
- Tax treatment is simplified: The calculator uses user-entered flat tax rates and any transfer-limit or RRSP-room amounts entered. It does not calculate full federal or provincial tax, credits, income splitting, AMT, surtaxes, future non-registered investment tax, or all income-source interactions.
- Investment and timing assumptions are simplified: The commuted value grows at a steady net return after fees. DB pension payments use the indexation, commencement, bridge benefit, life expectancy, and survivor assumptions entered. The model does not simulate market volatility, sequence risk, account-specific asset mixes, or actual mortality probabilities.
- Important factors are outside the model: Plan-specific rights, lock-in rules, maximum transfer limits, survivor protection, health, estate goals, creditor protection, employer plan risk, legal rights, and professional review may matter before an irrevocable pension decision. Province or territory is collected only for future tax-table and locked-in-account expansion and is not used in the current calculation.
This tool is for educational planning discussion only. It is not financial, tax, legal, actuarial, investment, retirement, estate, insurance, mortgage, or lending advice.