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Subject:  Re: Pension, annuity, or payout? Date:  9/25/2012  12:38 PM
Author:  RatioFool Number:  70957 of 88805

Like present value, actuarial present value is calculated by discounting future payments back to the present. The difference is that the payment to be received in each of the future years is multiplied by the probability of the intended recipient being alive in that year. The probabilities come from a "mortality table." Employers use a single mortality table, i.e. one that does not account for gender differences and other factors. Options like continuing payments to a surviving spouse use different payments and different expressions for probability in future years.

Ratio ~

(I'm not an actuary, but I happen to know a little about what actuaries do.)
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