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Pension Calculator

Estimate your defined-benefit pension based on years of service, average salary, and accrual rate.

A defined-benefit pension provides a guaranteed monthly income in retirement, calculated using a formula based on your service history and salary. This calculator estimates your pension using the standard formula: Years of Service x Average Salary x Accrual Rate.

The accrual rate (also called the benefit multiplier) determines how much pension you earn for each year of service. Common rates range from 1% to 2.5% per year. Government employees often receive 1.5-2%, while some generous plans offer up to 2.5%.

The average salary used in the formula is typically the average of your highest 3-5 years of earnings, sometimes called "final average salary" or "high-3" or "high-5" depending on the plan. This rewards employees whose salaries grow over their careers.

The replacement ratio shows what percentage of your salary the pension replaces. With 25 years of service at a 1.5% accrual rate, your pension replaces 37.5% of your average salary. Financial planners generally recommend a 70-80% total income replacement rate in retirement, so additional savings are usually needed.

Frequently Asked Questions

What is a pension accrual rate?
The accrual rate is the percentage of your salary you earn as pension benefit for each year of service. A 1.5% rate means each year of service earns you 1.5% of your average salary as annual pension. After 30 years, that's 45% of your average salary.
What salary figure should I use?
Most pension plans use an average of your highest 3-5 years of salary. Check your plan documents for specifics. This calculator uses a single average salary figure for simplicity.
Do pensions adjust for inflation?
Some pension plans include cost-of-living adjustments (COLA) that increase payments to keep pace with inflation. Many private pensions do not. Government pensions often include some form of COLA, though it may not fully match inflation.
Pension Calculator
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