What’s a pension band?

A pension band is a figure that is used when calculating the monthly benefit for a defined benefit pension program.  A pension band figure, which is typically changes each year, is generally a dollar amount that the person will receive monthly for each year of service with the employer when they retire..  The pension band generally varies by job title/grade level/occupation covered by a pension plan.. Once assigned, the job title, grade level and occupation will generally remain in that band unless the job title, grade level and occupation (by location) are later reclassified to a different pension band.

Example of Basic Monthly Benefit Calculation.

The following hypothetical example shows how a basic monthly benefit is calculated assuming: •

You are in pension band 115.

The monthly benefit for pension band 115 is $55.49

In this example, the monthly benefit for a person with 30 years of credited service would be

Monthly benefit for pension band 115 ($ 55.49 Multiplied by 30 years of net credited service x 30 Basic monthly benefit =  $1,664.70

Published by

Dwight Steward, Ph.D.

Dr. Steward regularly writes and speaks on topics involving business and individual economic damages, employment audits, and the analysis of payroll and time data in wage and hour investigations. Dr. Steward has also held teaching positions at The University of Texas-Austin in the Department of Economics and in the Red McCombs School of Business, The College of Business at Sam Houston State University, and at The University of Iowa. He has taught numerous courses in statistics, corporate finance, labor economics, business policies, managerial economics, and microeconomics.