The pension appraisal process is typically used to be able to compare a pension to other assets, such as a 401(k) or even the marital home, in order to compare apples to apples in equalizing the assets. Once we receive all of the necessary information, we will calculate the present value of your pension and send you a detailed letter.
Attorneys complete our Appraisal Request Form which lists the information we need, and fax, email, mail, or upload to us the information. If we are missing any information we will follow up until we receive it.
- Fax: 978.600.1487
- Email: email@example.com
- Mail: 500 West Cummings Park Suite 2500, Woburn, MA 01801
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We use the PBGC (Pension Benefit Guaranty Corporation) methodology to estimate what the pension is worth today. In essence, this process is estimating what it would cost today to buy an annuity in the marketplace which would pay the same monthly amount to someone with the same age and gender, starting at the same date, for the rest of their life.
We begin with the monthly amount payable at the normal retirement age for that plan. As the state pension plans do not have a normal retirement age, we estimate the likeliest scenario based on retiree data. The monthly amount payable is based on a retirement age factor, high-3 consecutive years of regular compensation, and years of creditable service. We use the last three years of W-2 forms and a recent paystub to back-calculate the high-3 compensation, and use the date of hire to estimate the years of creditable service. Please make note of any leaves of absence.
Using this monthly amount payable at retirement, we take all future payments that are to be made, and apply reduction factors for interest rates prescribed by the PBGC, and we also apply reduction factors for mortality, that is, the chance the participant is going to live to receive those payments.
For example, if someone is going to receive $3000 per month commencing at age 65, and it is a female currently aged 60, we would take that first payment, reduce it by five years of interest based on the current rate, and apply the appropriate mortality factor that a woman aged 60 would live to age 65. We then do this same calculation for all future payments to the end of the mortality table. The sum of these discounted future payments represents the estimated present value of the pension.
We make other adjustments as necessary per the terms of the plan, such as cost of living adjustments (COLAs).
Appraisals are performed within approximately two weeks after receiving all of the information we need.