<prompt> Human: TL;DR: Can anyone explain the numbers in this this PBGC table and how to use them when analyzing a pension buyout offer?---Hi everyone,nbsp;My dad is thinking about retiring next year, and he recently got a letter in the mail from his employers pension office.nbsp;Theyre offering him the opportunity to take a lump sum payment and roll it into an IRA instead of taking one of the usual annuity options --- if he retires in the next few months. Lump sum buyouts like this arent always offered since it depends on a plans funding level, so hes trying to figure out if he should retire during the window take the lump sum. I thought Id turn to the great folks of rpersonalfinance for some help. Specific numbers at bottom of post.nbsp;By many accounts his employer is in decline if I said its name and you live in the US, youd probably agree, but their pension plan is covered by the Pension Benefit Guaranty Corporation I guess its like the FDIC, but for pensions.nbsp;Should the growing possibility that his company will have financial troubles in the coming years play any role in his decision on lump sum vs. annuity?Worst case is that PBGC takes over the plan, right? Now, Ive looked at what the PBGC guarantees and it says it covers monthly payments a lot higher than what hed be getting. But during the initial PBGC takeover, could everyones pensions be reduced regardless??nbsp;How do we determine what interest hed need to meet or beat each year to make the lump sum last and beat the annuity option?I think if he were to take the lump sum, hed have to meet or beat a certain interest each year to make the lump sum worth it. How would we go about determining that ? Is it in the PBGC table we found? see next pointnbsp;Can anyone explain the numbers in this PBGC table on Interest Rates for Determining Lump Sums ?It seems like a very useful table for analyzing the offer. Problem is, we have no idea what the values mean, or what formulas they plug into. Anyone know?nbsp;Below are some numbers that his employer is estimating. A few quick things - he is married and would probably take the 100 Joint and Survivor w 10 years guaranteed payments if he were to go the annuity route. My folks have no debts, so theres no immediate need for the cash other than the peace of mind knowing they have it. And Im their only kid, and I do not need, nor do I expect any inheritance from them in the future.nbsp;Lump sum offer: 127,000100 JS annuity w 10 yrs guaranteed: 662monthnbsp;Im super curious on the PBGC table and the formulas used when calculating a pension lump sum buyout offer, because I think that might be the key to understanding this whole thing, and could help others in the future figure out if their buyout offer is a decent deal.nbsp;Thanks in advance!---edited for formattingAssistant: Answer: A roth investment of 127,000 would need to see a 6.25 rate of return to match the cash flows of the annuity.Human: Ok, after playing in a spreadsheet I can see how you came up with that.nbsp;662 12 134944nbsp;134944 - 127000 7944nbsp;7944 127000 0.06255 100 6.255  <response>: That is the nominal interest rate. I would tend to use the effective interest rate:1662127,00012 -1100 6.44Of course, this assumes that they do not draw down any of the equity. 