Table 4. Example of replacement rates from defined benefit plans with differing formulas

Table 4. Example of replacement rates from defined benefit plans with differing formulas
Benefit formula	Benefit amount/Amount replaced	10 years	11 years	20 years	30 years
1 percent	Annual benefit	$4,000	$4,400	$8,000	$12,000
1 percent	Replacement rate	10 percent	11 percent	20 percent	30 percent
1 percent up to 10 years; 1.5 percent thereafter	Annual benefit	$4,000	$4,600	$10,000	$16,000
1 percent up to 10 years; 1.5 percent thereafter	Replacement rate	10 percent	11.5 percent	25 percent	40 percent
1 percent up to 10 years; 1.5 percent up to 20 years; 2 percent thereafter	Annual benefit	$4,000	$4,600	$10,000	$18,000
	Replacement rate	10 percent	11.5 percent	25 percent	45 percent
Note: All calculations assume final earnings of $40,000 per year.