To properly calculate pension payments, you need to know the number of years you plan to accrue pension payments, the market interest, your gross monthly salary and increase rate, and the salary going toward the pension, according to Science Bits. The calculation provides an estimated fund for retirement.
Continue ReadingBegin calculating pension payments by entering the required information into the pension calculator on ScienceBits.com. Aside from providing the percentage of your income that is going to your pension, you also need to know how much is going toward insurance. You can choose to calculate your pension payments based on current market increases or estimate what the rates will be upon retirement. Be careful though, as inflation will increase by that time and could be deducted from pension payments. Check to see if your plan has inflation protection.
According to GetSmarterAboutMoney.ca, you can apply three different formulas depending on your situation: final average earnings, career average earnings or flat benefit. If you want to calculate your final average earnings, multiply your average salary over the last five years by 2 percent and then multiply that by the number of years as a plan member. To figure out your career average earnings, multiply your average career salary by 2 percent and then by the number of years as a plan member. Lastly, to calculate a flat benefit, multiply $50 by the number of years as a plan member. Make sure you fully understand your plan. If there is any confusion, a financial advisor or human resources specialist should be consulted.
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