I agree with Zipper that it can be misleading to use the present value of a pension in your net worth. After all, you probably can't sell your pension if you need money now. On the other hand, pension payments are properly accommodated in firecalc so that you can plan your needs for additional income in retirement.
Measuring the value of a pension by seeking a quote for an immediate annuity may or may not be appropriate. Under certain circumstances, that may actually misvalue the pension, as I will explain in a moment.
I don't know your level of experience in this area, so I apologize in advance if this is too basic.
This all begins with the asssumption that a dollar today is more valuable that a dollar received one year from today. To calculate how much less valuable, you must use a discount rate to find the present value of the future payment. The calculation is as follows:
p = yearly pension payment amount nomimal amount
x = discount rate, expressed as a decimal (e.g. 5% is .05)
n = years until payment received
*n means "to the nth power. thus *2 is squared * 3 is cubed etc
PV = present value = p/(1+x)*n
As an example, if you receive $100 in 1 year and use a 5% discount rate, the present value of that money is 100/1+.05)*1 = 1/1.05 = $95.24. If you don't get the money for two years, the value is 100/(1+.05)*2 = 100/1.1025 = $90.70.
To value of string of yearly payments, you need to present value each year's payment back to the start of the payment stream and then add up all the present values. Thus, the present value of receiving two $100 payments, one next year and one the year after, using a 5% discount rate, is $95.24 + $90.70 = $185.24. Theoretically, you would calculate your life expectancy from the payment date and present value each year as above. If you assume you will receive pension payments for 25 years, you would do 25 present value calculations and add them together. Ultimately, the sum approaches the value of PV = p/x. So, for payments received over long periods of time (say, more than about 15 years), many people present value the total sum of payments by simply dividing the yearly payment by the discount rate. In our example, if you received $100 per year forever, using a 5% discount rate, the present value would be $2000 (100/.05).
Now, you may think at this point "but I won't receive $100 every year, because my pension is COLA'd, so the equation won't work" A good point, but it can be taken care of in the selection of a discount rate (see below)
Obviously, the selection of discount rate makes a substantial difference in the calculation of present value. Use of a smaller discount rate makes the present value larger and vice versa (run the calculation above using 8% and the present value is only $1250). There are typically three components that go into the discount rate. To understand them, it helps to think that if you received the calculated present value today, how would you invest it to get the future value when it comes due? As with any investment, the returns you demand for parting with your money include some real rate of return, some inflation rate and some premium to compensate for the risk of default. A 30 year treasury bond is "risk free" because, under any conceivable scenario, the federal government doesn't default. If your pension is a federal pension you may want to use 30 year treasuries. If it is from a private company, you may need to add a few percent. Find the company's bond rating (AAA, BBB, C etc) and look up the prevailing market interest rates for corporate bonds issued by companies with that rating.
Now we come to the COLA part. As you may have noticed, both treasuries and corporate bonds incorporate an inflation component in their nominal return. If you assume that your COLA formula will keep up with actual inflation over the life of your pension (a big assumption if it is based on the CPI), you can account for the COLA (which increases payments in the future) by removing the inflation factor from your chosen rate (which reduces the discount rate and therefore increases the present value). For a federal pension, the "real return rate" on TIP's might be a good rate to use, since it is inflation protected, risk free. If it is a corporate pension, you might simply subtract the Treasury/TIP's spread from the risk adjusted corporate bond rate you chose. Thus, for a federal, COLA'd pension, assuming a 2% real return on TIPS, the present value might be 50 times the yearly payment (i.e. 1/.02).
A quote for an annuity incorporates assumptions by the insurance company about your life expectancy, inflation and their expected investment returns. They also want to make a profit. These assumptions may or may not be appropriate for your situation.
One last thing to remember -- if you will not receive your pension for several years, once you have valued it per the above equation, you will need to present value that figure back to today.