; FAQ 1130: Lifetime Income - How is it calculated?

FAQ 1130: Lifetime Income - How is it calculated?


How is the Lifetime income shown on the employee statements calculated?



The "Life only APR" and "100% J&S Rate" fields will store the Annuity Purchase Rates generated by the system when Calculations - Valuation - Plan Totals and Projections for the employee's Single and J&S 100% monthly Lifetime Income annuity amount to be displayed on the Employee statement. APR fields are based on the age of the Employee and the years until they turn age 67 (or their current age if older), the Mortality Table and the Interest Rate coded in the Plan Specifications - Projection Assumptions. User may check these rates if they like using our Table Maintenance - Functions - Calc Annuity Rates option. You must remember to alter their 'Benefit Date" on the setup screen to reflect a Retirement Age of 67 if you plan uses other than that (e.g. 65).


Using the following data:

12/31/2021 plan year end

Interest rate of 1.43 (10 year interest rate as of 12/1/2021)

RP21C U Mortality table

Balance of 135,000 (125,000 Funds, 10,000 Loan)

Employee DOB 10/7/1964, Age 67 on 10/7/2031

The system generated APRS are:

Single Life = 201.578

J&S 100% = 245.353

The Employee Statement will reflect monthly payments

Single Life $135,000/201.578 = 669.72

J&S 100% $135,000/245.353 =550.23