Are there different methods of determining the present value of a pension? How are the methods different?
Yes. There are two commonly recognized methods for determining the present value of a defined benefit plan for use in equitable distribution. The methods are referred to as: (i) the PBGC Actuarial and Mortality Tables Method; and (ii) the GATT Method. Pension Appraisers, inc. offers both of these methods of valuation to their clients. A brief description of the methods and their differences follows: The PBGC Actuarial and Mortality Tables Method uses the 1994 Group Annuity Mortality Tables with Projection Scale AA applied for the appropriate year to measure the employee’s projected lifespan, and the interest rates published and used by the Pension Benefit Guaranty Corporation as discount rates. The GATT Method uses the 1994 Group Annuity Mortality Tables with Projection Scale AA applied for the appropriate year to measure the employee’s projected lifespan, and the 30-Year Treasury Bond rate as a discount rate. As you can see, the differences in these methods lies within the interest ra
