To compare a pension benefit to a lump sum benefit the purchase price of an annuity can be used to determine the capital value of the pension benefit.
The genuine Deeds of the Fund provide an immediate pension in the event of retrenchment as has been confirmed by the Parliament of South Australia.
In the case of a typical male officer who was retrenched at the age of 52 after 26 years of service, the capital value of the benefit can be determined by adding:
- the pension payments due from the age of 52 to 60, and
- the purchase price of a life annuity at the age of 60 with a survivorship pension of 50%
The following graph shows the total capital value of the pension benefit for a married male officer: