Estimate the percentage of salary that must be controbuted to pension plan to remain solvent
Not what you're looking for?
Suppose that in a certain defined benefit pension plan:
A. Employees work 45 years earning wages that increase at a real rate of 2%
B. They retire with a pension equal to 70% of their final salary. This pension increases at the rate of inflation minus 1%
C. The pension is receives for 18 years.
D. The pension fund's income is invested in bonds which earn the inflation rate plus 1.5%
Estimate the percentage of an employee's salary that must be contributed to the pension plan if it is to remain solvent
(Hint. Do all calculations in real rather than nominal dollars).
Purchase this Solution
Solution Summary
The solution assists with estimating the percentage of salary contributed to the pension plan to remain solvent.
Solution Preview
See the attached file.
Suppose that in a certain defined benefit pension plan:
A. Employees work 45 years earning wages that increase at a real rate of 2%
B. They retire with a pension equal to 70% of their final salary. This pension increases at the rate of inflation minus 1%
C. The pension is receives for 18 years.
D. The pension fund's income is invested in bonds which earn the inflation rate plus ...
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Motivation
This tests some key elements of major motivation theories.