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Tutorial 1 (Intro to Pension)

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4 views

Tutorial 1 (Intro to Pension)

Uploaded by

Desmond Lean
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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AQ099-3-3-PNP Introduction to Pension Plans

1. An employee is now aged 40. His current annual salary rate is RM35,000. Assume that
he would still be employed at age 55, and the salary growth is governed by the annual
salary rate function
𝑠̄𝑥 = 𝑒 0.04(𝑥−25) ,for 𝑥 ≥ 25
(a) Calculate the annual salary rate at age 45.5.
(b) Calculate the salary for the year of age 45 to 46.

2. An employee is now aged 40. His current annual salary rate is RM35,000. Assume that
he would still be employed at age 60, and the salary growth is governed by the annual
salary rate function
𝑠̄𝑥 = 𝑒 0.04(𝑥−25) ,for 25 ≤ 𝑥 < 50
𝑠̄𝑥 = 𝑒 1+0.02(𝑥−50) ,for 50 ≤ 𝑥 ≤ 60
Calculate the salary for the year of age 48 to 54.

3. An employee is now aged 40 exact. His current annual salary rate is RM35,000. Each
year his rate of salary increases by 4%, 4 months after his birthday and then remains
constant for a year.
(a) Calculate the annual salary rate at age 45.5.
(b) Calculate the salary for the year of age 45 to 46.

4. An employee is now aged 25 exact. His current annual salary rate is RM28,000. Each
year his rate of salary increases by 3%, 8 months after his birthday and then remains
constant for a year. Assume the employee remains in employment until at least age 60.
(a) Calculate the annual salary rate at age 58.
(b) Calculate the yearly average salary for the year of age 57 to 60.

5. Suppose that 𝑠𝑥 = 1.045𝑥 for 𝑥 ≥ 20.


(a) A life aged exactly 36 at the valuation date receives RM100,000 in salary in the
year to the valuation date. Calculate his predicted average salary in his last 3 years
of working if he plans to retire at age 65.
(b) A life aged exactly 35 has a current salary rate of RM100,000. Estimate his salary
between ages 55 and 56. Assume the life remains in employment until at last age
56 and salaries are revised each year, the last adjustment being 6 months before
the valuation date.
(c) A life aged exactly 35 has a current salary rate of RM100,000. Estimate his annual
rate of salary at age 55. Assume the life remains in employment until at least age
55.5 and salaries are revised continuously.
(d) A life aged exactly 36 has a current salary rate of RM100,000. Estimate his salary
between ages 55 and 57. Assume the life remains in employment until at least age
57 and salaries are revised continuously.

Level 3 Asia Pacific University of Technology & Innovation Page 1 of 2


AQ099-3-3-PNP Introduction to Pension Plans

6. Based on the salary scale table,

𝑥 𝑠𝑥 𝑥 𝑠𝑥 𝑥 𝑠𝑥 𝑥 𝑠𝑥
30 1.00 40 1.85 50 3.41 60 6.21
31 1.06 41 1.96 51 3.63 61 6.56
32 1.13 42 2.09 52 3.86 62 6.93
33 1.20 43 2.22 53 4.10 63 7.31
34 1.28 44 2.36 54 4.35 64 7.70
35 1.36 45 2.51 55 4.62 65 8.08
36 1.44 46 2.67 56 4.91 66 8.48
37 1.54 47 2.84 57 5.21 67 8.91
38 1.63 48 3.02 58 5.53 68 9.35
39 1.74 49 3.21 59 5.86 69 9.82

(a) A life aged exactly 45 at the valuation date receives RM150,000 in salary in the
year to the valuation date. Calculate his predicted average salary in his last 5 years
of working if he plans to retire at age 60.
(b) A life aged exactly 35 at the has a current salary rate of RM75,000. Estimate his
salary between ages 55 and 56. Assume the life remains in employment until at
least age 56 and salaries are revised continuously.
(c) A life aged exactly 35 at the has a current salary rate of RM100,000. Estimate his
annual rate of salary at age 60. Assume the life remains in employment until at
least age 60.5 and salaries are revised continuously.

Level 3 Asia Pacific University of Technology & Innovation Page 2 of 2

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