{
  "slug": "pension-lump-sum",
  "title": "Pension Lump Sum vs Annuity Calculator",
  "heading": "Pension Lump Sum vs Monthly Annuity",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/pension-lump-sum",
  "summary": "Which payout option is worth more to you.",
  "description": "A lump sum you can invest versus a guaranteed monthly cheque. This compares the present value of the annuity against the cash offer.",
  "formula": "PV of annuity = Σ payment ÷ (1+r)^t",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=pension-lump-sum",
  "inputs": [
    {
      "id": "lump",
      "label": "Lump sum offer",
      "kind": "number",
      "hint": null,
      "default": 350000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "monthly",
      "label": "Monthly pension",
      "kind": "number",
      "hint": null,
      "default": 2200,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "years",
      "label": "Years of payments expected",
      "kind": "number",
      "hint": null,
      "default": 25,
      "unit": null,
      "min": 1,
      "max": 50
    },
    {
      "id": "rate",
      "label": "Discount / return rate",
      "kind": "number",
      "hint": null,
      "default": 5,
      "unit": "%",
      "min": 0,
      "max": 15
    }
  ],
  "outputs": [
    {
      "id": "winner",
      "label": "Better option",
      "format": "raw",
      "hint": null,
      "primary": true
    },
    {
      "id": "pv",
      "label": "Present value of pension",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "lump",
      "label": "Lump sum offer",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "diff",
      "label": "Difference",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "total",
      "label": "Total nominal payments",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Lump sum offer: 350000 $",
      "Monthly pension: 2200 $",
      "Years of payments expected: 25",
      "Discount / return rate: 5 %"
    ],
    "outputs": [
      "Better option: Take the monthly pension",
      "Present value of pension: $376,332",
      "Lump sum offer: $350,000",
      "Difference: $26,332",
      "Total nominal payments: $660,000"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter lump sum offer ($).",
      "Enter monthly pension ($).",
      "Enter years of payments expected.",
      "Enter discount / return rate (%).",
      "Read your better option on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "lump": 210000,
        "monthly": 1300,
        "years": 15,
        "rate": 5
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "lump": 350000,
        "monthly": 2200,
        "years": 25,
        "rate": 5
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "lump": 560000,
        "monthly": 3500,
        "years": 40,
        "rate": 5
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "How does the pension lump sum vs monthly annuity work?",
      "a": "A lump sum you can invest versus a guaranteed monthly cheque. This compares the present value of the annuity against the cash offer. The underlying maths is: PV of annuity = Σ payment ÷ (1+r)^t"
    },
    {
      "q": "What do I need to enter?",
      "a": "4 values: lump sum offer, monthly pension, years of payments expected, and discount / return rate. Each field starts with a sensible default, so you can change one number at a time and watch the result move."
    },
    {
      "q": "What does the better option result mean?",
      "a": "It is returned as a plain value and updates live as you edit the inputs, so you can compare two or three versions of a scenario in a few seconds."
    },
    {
      "q": "Is this calculator free, and do I need an account?",
      "a": "Yes, it's free, and no account is required. Nothing you type is stored on our servers — the maths runs entirely in your browser."
    },
    {
      "q": "How accurate is the result?",
      "a": "It applies the standard formula exactly, so the arithmetic is precise. Results are estimates before tax, fees, and inflation unless an input explicitly covers them."
    },
    {
      "q": "Who is this tool for?",
      "a": "It's built for anyone comparing money scenarios before committing — budgeting a payment, sanity-checking a quote, or seeing what a change in rate or term actually costs."
    }
  ],
  "related": [],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Pension Lump Sum vs Annuity Calculator (https://www.revenuelab.fyi/toolbox/pension-lump-sum)"
}