How is pension lump sum calculated? Age specifically. Do they

>>1761806
no
there are many different kinds of pensions

>>1761806
CALPERS is one of the largest and is government
they take the years you worked and multiply it by %
so if you started the job at 50, before 2013, you would get about 2.7*(5 years of service) = around 15% of your pay.
you can buy additional years too, its usually a great buy
they have 0 age/mortality adjustments
if you work for gov from 20 to 25, and leave, you will get fucked, but the people who come in at 50 and work for 5-10 years make a killing

>>1761806
calpers is indexed for inflation, and is a 'private' organization that hires public workers, it is horribly managed, and lost 2% last year, when it was a kick ass year.

the pension manager of Nevada is a bogleheads member and literally is the one person in charge of Nevada's pension, he just buys SP500 and total bonds
he is the best pension fund manager in the country and works about 10 hours a week

>>1761806
calpers has a staff well over a few hundred people, uses lots of hedge funds, has big fancy buildings, and is the definition of everything you do not want in a pension plan

>>1761811
>>1761816
Jesus fuck WHAT

My mom will be getting 50% pension from the grocery store my dad worked at since the early 80s. I have no idea how much she'll be getting but from some Googling it looks like she can maybe take a lump sum.

>>1761806

oh and your normally an idiot if you take the lump sum...

you need to know NPV, FV, PV calculations and a mortality table (vanguard has an easy to use one) to see if it is a good deal.

Private pensions have to be funded, they use a very low interest (real) rate to predict the pension fund is fully funded.

big thing about funding is a pension should be at 100% funded, or within a few percent.

whenever public pensions get over 100% funded, they distribute more payments to current retirees, then if there is a stock market crash the fund dips below 100%, and it will be much less likely it will ever hit 100% funding again.

short and simple: don't cash out your pension, be a bag holder, it's a good idea in the long run

>>1761823
really bad idea to take a lump sum....

>>1761806
read this page, watch some videos on NPV

it is the most important concept in finance that exists

http://www.investopedia.com/terms/n/npv.asp

>>1761806
the only reason the pension company is offering your mother a lump sum, is the fact that the actuaries believe it is a good deal for them selves, not your mother

>>1761806
Pension plans are my favorite subject in finance, but your kind of question might be better suited for bogleheads than 4chan

>>1761806
>>1761811
government and traditional pensions give/gave 0 fucks about life expectancy, contributions, mortality, and age...

a pension is essentially a deferred inflation adjusted annuity (expensive life insurance product), but controlled by politicians instead of acturaies

>>1761806

Federal pension is 1% times every year you worked multiplied by your average three highest earning years. So if you make 100k for 5 years in a row your pension is $5,000 per year. It is adjusted for inflation too.

>>1762126
It used to be 2% not long ago, they fucked all the new workers over...

The age your allowed to take the pension is equally important.

55 is old californian, 62 is new worker in california

>>1763101

Yeah they did and they will probably take it away completely at some point. It isn't really enough to retire on. I've been working for the feds for about 2 years and I have like $3k in the pension account. I plan on putting atleast five years in so I get a pension and just retiring early and wait to draw it when I'm old enough just for extra cash or whatever.