# Pension Split Optimization Logic

Our pension optimization tool uses an algorithm. Here are the basics of how it works.

1. Generate Tax Scenarios:
• The tool considers various possible combinations of actions related to taxes. This might include different ways of withdrawing money.
2. Calculate Taxes:
• For each combination, the algorithm calculates the taxes you would pay. This involves considering factors like income tax rates, capital gains taxes, and any other tax implications related to pension decisions.
3. Evaluate Outcomes:
• The algorithm looks at the total tax amount for each scenario. It takes into account both short-term and long-term tax consequences based on different decisions.
4. Compare Tax Results:
• By comparing the total tax amounts for each scenario, the algorithm identifies which approach results in the lowest overall tax liability. This is the scenario that the algorithm considers as the best tax outcome.

In Layman's Terms: Imagine you have a few different ways you can manage your pension –  withdraw at different times, etc. In this context it means considering every possible combination of these actions and figuring out how much tax you would pay for each combination. Then, it picks the combination that results in the least amount of tax. It's like trying out different recipes to find the one that tastes the best – in this case, the one that minimizes your tax bill. the basic idea is: to explore all scenarios to find the one with the best tax outcome for your pension.