Annuity Calculator

This program calculates the present value now and at time payments start, using the specified assumptions, of annuity payments in the amount and form specified. In addition if a current Deposit amount is entered its projected value at time payments start is also determined. One use of this program is to calculate Actuarially Equivalent optional forms of retirement benefits.

Mortality

Within a year constant forces of interest and mortality are assumed. Most published tables are based on approximations using the Woolhouse summation formula. Therefore, although usually close, the values generated by this program will not agree with most published factors. The Woolhouse approximations can produce distorted values at various interest and mortality combinations.

The qxs of the selected mortality table may be generationally projected using the AA projection rates. Past is the number of years projected to reach the year of calaulation.

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Interest

1 - First segment annual effective interest Spot percentage applicable to first 5 years.
2 - Second segment annual effective interest Spot percentage applicable to next 15 years.
3 - Third segment annual effective interest Spot percentage applicable after first 20 years.
Deposit - the annual effective interest percentage used to project the Deposit as of Now to when annuity payments Start.
COL - the annual percentage increase in Monthly Payments. The annuity payments are increased by this amount at the beginning of each year after the Start.

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Primary

Now - the current age of the primary recipient of the annuity payments.
Start - the age of the primary recipient at the time annuity payments start.
Stop - the age of the primary recipient at the time annuity payments stop. If payments continue for life this should be blank.

Now and Start need to be entered, to define the deferral period, even if all payments are to be guaranteed.

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Alternate

Age - the current age of the alternate recipient of the annuity payments.
% - the percentage of the monthly payment amount paid to the alternate recipient after the death of the primary.

Age and % only need to be entered if Benefit Form is Joint & Survivor or Joint & Contingent.

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Monthly Payments

Start - is the monthly payment amount when payments commence.
Step - is the amount of increase or (-) decrease in the monthly payment amount which occurs when the primary recipient attains Age.
Age - is the primary recipient's age (whether still living or not) when the Step change in monthly payments occurs. If Age is blank Step is then only applicable if Benefit Form is Joint & Survivor and then is the amount of change in monthly payments to the primary recipient if predeceased by the alternate recipient after payments start.

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Deposit Values

Now - is the current value of an account balance, e.g. employe contributions, value of annuity, etc.
Start - is the Now value accumulated, using the Deposit interest rate, to the time annuity payments start.

These radio buttons are only applicable if a value is entered in Now.

No Refund - If selected it means the Deposit amount is not guaranteed to be paid to recipients.
Installment Refund - If selected, monthly payments are guaranteed to continue, after starting, until at least the Start value of Deposits has been paid. Paid as a Cash Refund on second death if Benefit Form is Joint & Survivor or Joint & Contingent.
Cash Refund - If selected, if the Start value of Deposits exceeds the total payments, made after starting, at time payments cease the difference is paid at that time.

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Benefit Form

This is the type of annuity in which payments are made. If Certain & Life and Pre Start is none, payments are made for at least the Certain period. If Joint & Survivor or Joint & Contingent and Pre Start is none, and only the Primary or Alternate annuitant survives to the Primary's Start Age payments are made to the survivor.

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Years Certain

This is the number of years for which annuity payments are guaranteed, it only applies if Benefit Form is Certain & Life or Certain.

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Pre Start

This defines the type of payments made if the primary recipient dies before Starting to receive payments. The 50% J&S is only applicable if an Alternate Age is specified and is only payable to the Alternate starting when the Primary would have reached the Start Age.

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Lump Sum Values

Now - This is the current present value of the payments, including any Pre Start death benefit, beginning at Start.
Start - This is the value, at Start, of the payments beginning at Start. The primary and alternate, if one, recipients are assumed to be alive at Start.

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