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The basics
A salary can contribute to a defined-benefit pension as a percentage of pay or a yearly amount. That contribution reduces available cash. It does not, by itself, create a future pension payment.
Either enter the pension as its own income card or turn on Work out the pension on the job and supply the benefit formula.
Illustrative numbers
A simple benefit formula
Benefit per service year2%
Credited service30 years
Final-average salary$100,000
Annual benefit before any cap$60,000
A 50% survivor election would continue half of the pension amount in force when the modeled survivor period begins.
Calculation transparency
How it works in MoneyWhatIf
- 01
The job’s contribution can be marked pre-tax or after-tax. A pension deduction does not create an investment-account balance.
- 02
The calculated benefit combines prior service with service projected in the plan. Final-average salary uses the pay history the plan can see; it does not invent salary from before the forecast.
- 03
The benefit normally starts when the salary stops, with an optional custom start. Set its cost-of-living adjustment and check whether increases are simple or compounded.
- 04
An elected survivor share continues eligible income after its owner’s death, ending at the applicable term or the survivor’s death. Social Security uses its separate survivor calculation.
Keep in mind
Model limits
The formula is a planning estimate, not a complete pension-plan rulebook. Enter a quoted benefit directly when it better represents your arrangement.
The model does not automatically price the reduction an administrator may apply for a particular survivor election; enter the appropriate starting benefit.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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The words behind it
Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.