AQ099-3-3-PNP Service Table
1. Company ABC offers a pension plan for their Chief Operating Officer (COO), currently
age 63. The pension plan pays a lump sum benefit of 250,000 at the end of the year of
retirement. COO’s birthday is January 1.
Basis:
Standard Service Table
Interest rate 5% per year effective.
(𝑑) (𝑖) (𝜏)
(a) Describe in words and calculate 𝑞64 , 𝑞64 and 2𝑝63 .
(b) Calculate the expected present value of the retirement benefit.
2. A pension plan member is aged 55. One of the plan benefits is a death in service
benefit payable on death before age 60.
Basis:
Standard Service Table
Interest rate 6% per year effective.
(a) Calculate the probability that the employee dies in service before age 60.
(b) Assuming that the death in service benefit is $200,000, and assuming that the
death benefit is paid immediately on death, calculate the EPV at age 55 of the
death in service benefit.
3. Marvel joins DEF Insurance company today as an actuary at age 60. Her starting annual
salary is RM225,000 and will increase by 4% each year on her birthday. Assume that
retirement takes place on a birthday immediately following the salary increase.
DEF insurance company offers a plan to its employees with the following benefits:
A death benefit payable at the end of year of death equal to a single sum of
100% of the annual salary rate at time of death, provided death occurs while the
employee is still employed.
A single sum retirement benefit equal to 20% of the final salary at time of
retirement for each year of service. Retirement is compulsory at age 65,
however early retirement is permitted at ages 63 and 64. The retirement benefit
is paid on the date of retirement.
𝑖 = 0.05
Service Table as follows:
Age 𝑥 (𝜏) (𝑤) (𝑟) (𝑑)
𝑙𝑥 𝑑𝑥 𝑑𝑥 𝑑𝑥
60 100 21 0 1
61 78 13 0 1
62 64 7 0 1
63 56 0 6 1
64 49 0 5 1
65 43 0 43 0
(a) Calculate the EPV of death benefit.
(b) Calculate the EPV of retirement benefit.
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