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Intercst said it right. Determining the present value (today's cash value) of your future lifetime annuity is a two step process.

You don't give all the needed information, so I'll make some assumptions to see if I can come up with an approximate present value.

Current age: 51
Pension full-benefit age: 65 (in 2026)
Life expectancy: 87
Current accrued benefit: $24,000/yr
Inlation adjuster for benefit: No
Expected annual average rate of return during retirement years: 5.2%
Expected annual average rate of return, pre-retirement: 7.4%

Calculations:

Value of lump sum required at first year of retirement: $326,363
Present (today's cash) value: $120,127

Clearly, there is some form of miscommunication

Reasons the employer's estimate on present value could come in lower than this is if they assumed a joint survivor benefit or if you are not fully vested in the accrued benefit.

One other possiblility is that the HR person gave you the annual funding requirement rather than the present value...although even the AFR should be higher than $1,000.

Post back with what you find out.

BruceM
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