GATT Rate Pension Lump Sum Calculator
The monthly amount you would receive at retirement.
Age when pension payments begin.
Current 30-Year Treasury Bond yield.
Average mortality age used for the estimate.
Estimated Lump Sum Payout
$0.00
Note: This is an estimate based on the Present Value of an Annuity formula. Actual plan calculations use complex mortality tables (e.g., RP-2014) and segmented interest rates mandated by the IRS/PPA.
Understanding the GATT Rate and Your Pension
For employees with Defined Benefit (DB) pension plans, the "GATT rate" is a critical factor in determining the value of a lump-sum payout. Historically referring to the General Agreement on Tariffs and Trade, this term is colloquially used to describe the 30-Year Treasury Bond interest rate used as the discount rate in present value calculations.
Key Concept: Inverse Relationship
There is an inverse relationship between interest rates and your lump sum. When the GATT rate (30-Year Treasury yield) goes up, your lump sum value goes down. Conversely, when rates fall, lump sum values rise.
There is an inverse relationship between interest rates and your lump sum. When the GATT rate (30-Year Treasury yield) goes up, your lump sum value goes down. Conversely, when rates fall, lump sum values rise.
How the Lump Sum is Calculated
A lump sum is essentially the "Present Value" of all the future monthly payments you would have received if you chose the annuity option (monthly checks for life). To calculate this, actuaries need two main variables:
- Mortality: How long you are statistically expected to live (to determine how many payments you would receive).
- Interest Rate (Discount Rate): The rate used to discount those future payments back to today's dollars.
The Pension Protection Act of 2006 (PPA) altered how these rates are applied, often using a "segment rate" methodology, but many plans still reference the 30-Year Treasury rate for estimates or specific plan provisions.
Why the "GATT Rate" Matters for Timing
Because pension plans often reset their interest rates annually or quarterly based on prior months' Treasury yields, retirees can sometimes "time" their retirement. If interest rates have risen significantly this year, retiring before the plan updates to the new, higher rates (often on January 1st) could save tens of thousands of dollars in lump-sum value.
Using This Calculator
This tool estimates the Present Value of a Life Annuity based on your inputs:
- Monthly Pension Benefit: The Single Life Annuity amount from your benefit statement.
- GATT Rate: Enter the current yield of the 30-Year US Treasury Bond.
- Life Expectancy: While actual plans use unisex mortality tables, you can adjust this age to see how longevity assumptions impact the calculation.