Definition
An Annuity Factor is a mathematical multiplier representing the present value of $1 per period paid over n periods at an interest rate r.
Formula
a_n|r = [ 1 - (1 + r)^(-n) ] / r
Glossary Term 3 min read
Updated September 2026
Annuity Factor - Definition, Mathematics & Usage
Definition and formula for Annuity Factors used to convert recurring cash flows into present values.
AP
Actuarial Review Board
Peer-Reviewed
Verified by Certified Pension Actuaries (FSA / EA / CFA) • IRS 417(e) Methodology Authoritative References & Official Regulatory Sources
Verified citations from official government databases, actuarial research bodies, and statutory documentation.
Internal Revenue Service (IRS.gov) U.S. Government
IRS Notice: Minimum Present Value Segment Rates (§ 417(e))
Statutory 3-tier corporate bond yield curve segment rates used by corporate plan sponsors to calculate legal minimum lump-sum buyouts.
Inspect Regulatory Source
Pension Benefit Guaranty Corporation (PBGC.gov) Federal Agency
PBGC Maximum Monthly Guarantee Tables for Defined Benefit Plans
Statutory federal insurance guarantee limits protecting private pension participants in the event of corporate plan termination or bankruptcy.
Inspect Regulatory Source
Society of Actuaries (SOA.org) Actuarial Standard
Society of Actuaries (SOA) Pri-2012 & Pub-2010 Mortality Study Tables
The institutional empirical mortality tables and generational mortality improvement scales (MP-2021) powering actuarial present value projections.
Inspect Regulatory Source
Social Security Administration (SSA.gov) U.S. Government
Social Security Administration: Actuarial Period Life Table
Official U.S. decennial life expectancy and survival probability curves for male and female retirees across single and joint age horizons.
Inspect Regulatory Source
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