Chapter 11, Question 11.23

[Zane Heyl]

Hi all,

I'm busy going through Pensions, and Q11.23 requires that I determine the rate at which Johnny Monachesi's business contributes to his pension given a current fund accumulation of 37000 (which I deduct off the EPV of the pension at his age of 40) arriving at 110403.

I get the same equation, but I'm not seeing how the answer in my notes is correct:
6692k = 110403 is the final equation and the answer in the notes has k solved to be 0.125 (= 12.5%). Not entirely sure about the mathematics here.

Am I missing something?

I'm using the 2016 CT5 notes by the way.

Thanks!

 

[deepakraomore]

Given that he contributes 4%, we need to find balancing contribution by firm.
Equation is \(6692 k = 110403\) gives \(k = 16.5\%\) This is total contribution to scheme.
now Johny contributes \( 4\%\) and firm contributes \( 16.5\% - 4\% = 12.5\%\)

 

[Zane Heyl]

Given that he contributes 4%, we need to find balancing contribution by firm.
Equation is \(6692 k = 110403\) gives \(k = 16.5\%\) This is total contribution to scheme.
now Johny contributes \( 4\%\) and firm contributes \( 16.5\% - 4\% = 12.5\%\)

Sorry deepakroamore,

I'm not seeing how 16.5% of 6692 equals 110403. Can you please explain what it is that I don't know here?

Thanks.

 

[Zane Heyl]

Sorry deepakroamore,

I'm not seeing how 16.5% of 6692 equals 110403. Can you please explain what it is that I don't know here?

Thanks.

Right so this was a stupid post.

I incorrectly manipulated this pathetically simple little equation.

Thanks Deepak.