Generate Pension Report Create Account Log In How It Works Online Demo Sample Report Download Pension Form Print Pension Form QDRO Request Forms FREE Download Book Basics of Pensions In Depth Analysis Special Issues Actuarial Standards Sample Authorizations Pension FAQs QDRO FAQs Glossary Join Our Mailing List About Our Company About Our Analysts Contact Us Phone Consultations Our Fee Schedule Testimony Your Privacy Security Terms of Use Customer Support	Other Techniques for Valuing Defined Benefit Plans The most preferred method of determining the value of a defined benefit plan is to use the mathematical formulas which derive present value. However, there are some other ways to determine the value of these types of plans. Valuation Formulas found within the Plan Some plans have formulas in place which determine the value of the employees benefits. The result determined using this type of formula would certainly provide an indication of the value of the benefits. Total Contributions to the Plan The value of the benefits is equal to the total contributions made to the plan by or on behalf of the employee. This method does not consider the fact that these contributions increase in value over time. Using this method will always result in a lower value than would be determined using the present value method. Therefore, this method is typically not acceptable. However, in some cases, this is the only method available. In certain instances, if an employee's benefits do not vest, the only money offered is the total of the contributions to the plan. In such a case, the total contributions would provide an accurate picture of the value of the benefits. Total Offset Under the total offset method, the value of the pension is equal to the expected annual benefit times the owner's life expectancy after retirement. This sum is not reduced to present value, on the assumption that the gain after divorce through interest and appreciation will be exactly offset by the loss due to inflation. This assumption is untrue, however, as interest rates have generally exceeded the inflation rate. As a result, the cases uniformly reject the total offset method. Withdrawal Value The withdrawal value of the pension is the amount which would be received if the employee decided to liquidate his/her interest in the plan. This withdrawal value would include various taxes and/or penalties which would not normally be incurred under the plan. Therefore, this is not an appropriate reflection of value unless the employee actually does liquidate his/her rights to the benefits. Return to In Depth Analysis

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