How to Calculate Pension Payout on Resignation

Your pension plan pays you a benefit when you retire. This benefit, combined with your personal savings and Social Security, serves as a three-part system, which should give you all the income you need after you retire. The company normally calculates your pension benefits when you retire. However, some governments provide you with a formula to help you determine how much your pension benefits will be when you retire. Your actual benefits will vary according to the company you work for and the specifics of the pension plan.

Gather your pension documentation. Your human resources department will have your pension information available for you as well as any formulas you need to calculate benefits.

Gather your work history information. You must know how long you have worked for the company. Most pension plans calculate payments on the basis of your years of service.

Obtain your salary history. Some pensions take the highest three consecutive earning years, average them, and multiply this number by a percentage. You'll need to know what your three highest earning years were.

Calculate your pension amount. Your human resources department should give you the formula to calculate your pension income. Once you know your years of service and your income information, simply input the numbers into the formula and perform the calculation. The resulting number will be your pension income payable to you when you retire.


  • Most pension income is taxable. You must report this income on your federal and state income tax return, unless your state specifically excludes your pension income tax or your pension qualifies for an exemption under federal tax laws.