About the Pension Calculator

This web page is a tool to help the user better understand the different variables that impact pension math. Pension arithmetic is incredibly complex, the dollar amounts are huge and seemingly insignificant changes can make a very large difference in the math.

This page does not attempt to quantify Rhode Island's total pension liability. This page instead focuses on a single individual's pension math, allowing the user to change various aspects of an individual's pension plan to gauge how these changes might impact the system as a whole. This tool allows a comparative analysis of 4 different basic pension plans.

By clicking 'viewing source' in your web browser you can footnotes in the code for where we found the different starting points for each career.

There are a lot of factors that this relatively simple calculator cannot take into account. Each pension plan has many possible options. For example, some plans offer employees an optional COLA benefit, while others provide pension benefits for surviving spouses, etc. I did not attempt to factor these variations into this software, although I will say here that the sheer complexity of these plans needs to be addressed. Survivor's benefits can be a very expensive proposition - especially if a young spouse survives a retiree who dies of natural causes many years post-retirement.

This tool compounds all interest calculations, including COLAs, annually.

We encourage the user to tweak the parameters to see how simple changes can radically impact the pension math.

The best comparative numbers on this page are the last 2 numbers in the results section in the bottom right section: 'Number of years that an employee's contributions pays for retirement' and 'Percentage of employee's salary needed to be paid in by the state'. A more sustainable change will raise the first number and lower the second.

Try changing the assumed market rate of return from 8.25% to 7.5% (a change that the RI Treasurer's office made in April of 2011). An assumed rate of return of 7.5% is still high relative to how the market has been performing. Try lowering this number to 7% and see the increase in the State's required contribution. Our true unfunded liabilities are most likely higher than the 2011 revised Treasurer's calculations.

**The calculations in this software were not reviewed by an actuary or an accountant. This tool is to help the user understand the basic principles behind pension arithmetic.

Pension Calculator