The Society of Actuaries (SOA) developed the Annuity Factor Calculator to calculate an annuity factor using user-selected annuity forms, mortality tables and projection scales commonly used for defined benefit pension plans in the United States or Canada. This tool is designed to calculate relatively simple annuity factors for users who are accustomed to making actuarial calculations for defined benefit pension plans in the United States or Canada.

The Annuity Factor Calculator is not intended to replace actuarial valuation software or similar software used in the administration of defined benefit plans or pricing of insured annuities, and should not be used for such purposes.

For more information about technical terms as defined for use with this calculator, please see the Technical Terms.

Contact research@soa.org, with any questions or comments about the Annuity Factor Calculator.

The Annuity Factor Calculator allows users to select any of the mortality tables listed below. For some of the tables, reports and background material are available. In addition, the tables are available in electronic form.

The Annuity Factor Calculator allows users to select any of the mortality projection scales listed below. For some of the projection scales, reports and background material are available. In addition, the projection scales are available in electronic form.

The SOA makes no warranty, guarantee or representation, either expressed or implied, regarding the Annuity Factor Calculator (“Calculator”), including its quality, accuracy, reliability , or suitability and HEREBY DISCLAIMS ANY WARRANTY REGARDING THE CALCULATOR’S MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

SOA makes no warranty that the Calculator is free from errors, defects, worms, viruses or other elements or codes that manifest contaminating or destructive properties.

In no event shall SOA be liable for damages (including any lost profits, lost savings, or direct, indirect, incidental, consequential or other damages) in connection with or resulting from the use, misuse, reliance on, or performance of any aspect of the Calculator.

The user assumes all responsibility for the use or misuse of the Calculator.

The definitions and descriptions below apply to the Society of Actuaries Annuity Factor Calculator (AFC). These terms may have different definitions or applications in other contexts, including other materials or products prepared by the Society of Actuaries or other actuarial organizations.

Age

In whole years to the nearest birthday.

Annuity factor

Annuity factors computed by the AFC are for use with annualized benefit amounts.

BCA

Benefit commencement age.

BOM

Monthly payments occur at the beginning of each month, before the mortality decrement is applied.

BOY

Annual payments occur at the beginning of each year, before the mortality decrement is applied.

Certain and life annuity

Annual or monthly benefits paid beginning immediately and continuing for as long as the primary annuitant lives, but for at least as long as the specified certain period. For a deferred annuity, the certain period begins when benefits begin. If the annuitant dies during the certain period, payments continue to a beneficiary or estate until the end of the certain period.

COLA (Cost of Living Adjustment)

The annual rate at which benefits are increased after benefit commencement. No increases are assumed to occur prior to benefit commencement.

Deferred annuity

Annual or monthly benefits paid beginning at a specified future benefit commencement age provided that the annuitant lives to that age. For joint and survivor annuities, survivorship contingency is included during deferral.

Duration

The approximate percentage change in annuity factor per 100 basis point change in discount rate. Duration of 8.2 means that for discount rate decrease of 100 basis points, the annuity factor will increase by approximately 8.2%. There are a variety of types of duration; AFC calculates effective duration.

EOM

Monthly payments occur at the end of each month, after the mortality decrement is applied.

EOY

Annual payments occur at the end of each year, after the mortality decrement is applied.

Generational mortality projection

Mortality rates are projected from the table's base year as noted in the AFC's Mortality Tables descriptions.

Joint and survivor annuity

Annual or monthly benefits paid beginning immediately to a primary annuitant for as long as the primary annuitant lives. Upon the primary annuitant’s death, if the beneficiary is living, a specified percentage of the primary annuitant’s benefit continues to the beneficiary for as long as he or she lives.

Joint life annuity

Annual or monthly benefits paid for as long as both the primary annuitant and beneficiary live; benefits cease upon the first death of the primary annuitant or beneficiary.

Monthly exact

Mortality decrements are applied assuming a uniform distribution of deaths throughout the year.

Monthly approx 11/24 BOM

The Woolhouse approximation formula to determine the present value of an annuity with monthly payments from an annuity factor for annual payments: äx(12) = äx – 11/24 * prob(x survives to BCA) * interest discount from BCA to x

MORT #

SOA table identity number in Mortality and Other Rate Tables.

Mortality projection

Mortality improvement is assumed for whole numbers of years. For descriptions of the specific mortality projection (improvement) scales available in the AFC see Projection Scales.

Mortality table

For the descriptions of the specific mortality tables available in the AFC see Mortality Tables.

Single life annuity

Annual or monthly benefits paid beginning immediately and continuing for as long as the annuitant lives; payments cease when the annuitant dies.

Static mortality projection

Mortality rates are projected from the table's base year to the valuation year plus the number of static projection years. Each table’s base year is noted in AFC’s Mortality Tables descriptions.

Uniform distribution of deaths

AFC assumes uniform distribution of deaths during a year.