Lump Sum Formula:
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Definition: This calculator estimates the lump sum payment amount based on an annual pension annuity and present value factor.
Purpose: It helps Australian retirees and financial planners determine the equivalent lump sum value of a pension annuity.
The calculator uses the formula:
Where:
Explanation: The annuity amount is multiplied by the present value factor to calculate the equivalent lump sum payout.
Details: Accurate calculation helps retirees make informed decisions between taking a lump sum or regular pension payments.
Tips: Enter the annual annuity amount and present value factor (default 15.0). All values must be > 0.
Q1: What is a typical PV factor for Australian pensions?
A: The default factor of 15 is common, but actual factors vary based on age, interest rates, and pension rules.
Q2: How is the PV factor determined?
A: It's calculated based on life expectancy and discount rates, often provided by superannuation funds.
Q3: Are there tax implications for lump sums?
A: Yes, lump sums may have different tax treatment than annuities. Consult a tax professional.
Q4: Can I get both lump sum and annuity?
A: Many Australian pension plans allow partial lump sums with reduced ongoing payments.
Q5: Where can I find my exact PV factor?
A: Your superannuation fund can provide the exact factor based on your circumstances.