This tool is designed to project the potential benefits accruing from a specific type of defined benefit retirement plan. It simulates the growth of a hypothetical account balance over time, reflecting contributions, interest credits, and eventual payouts. For instance, a user might input their current age, salary, anticipated retirement age, and projected interest crediting rate to estimate their potential retirement savings within the plan.
Its significance lies in providing individuals and employers with a clear understanding of the potential financial outcomes associated with adopting or participating in this retirement savings vehicle. This projection aids in making informed decisions about retirement planning, considering factors such as contribution levels and interest crediting strategies. Historically, such calculations were complex and required actuarial expertise, but modern tools have simplified the process, making it more accessible to a wider audience.