Chapter 14 Example on Page 33

Hi, can anyone please tell why doesn't the answer restrict the age retirement between 60 to 65 while it has that condition in the question? Or did I interpret it wrong?

Thanks

 

It makes no difference when you're using the pension scheme in the Tables, as rx=0 for x<60 in this table.

 

Julie, we are looking at sR_bar_40, which is different from sR_bar_60? Since we are concerned about future service. I feel the same as Jackie_You. Please HELP!

 

sRbar60 just takes into account the years of service from age 60 onwards. Doing this you are ignoring the contribution from the years of service between 40 and 60.

An alternative way to write the top line is:

(s40 M60 + s41 M60 + ... + s59 M60) + s60 Mbar60 + ... + s64 Mbar64

= (s40 + ... + s59) M60 + sRbar60

But this isn't very useful because you can't just look it up in the Tables.

 

I also thought the solution is wrong. Also need some explanation.

 

Thanks Julie, but also sRbar40 takes into account retirement between 40 and 60. Since

Cx = takes into account retirement between (x, x+1), relating to the current year of service
Mx = sums over all possible years of service
Rx = sums over all possible retiremnts for all possible years of service

and the Rbars follow.

So we are including the possibility of retirement before 60, since the commutation function Cx is in Rx?

 

I think I now get it Julie, since rx = 0 for x <60. So is Cx = 0, thus no one retires before. Can't believe I just saw this now.

However, if we look at April 2010, question 7. There is no retriction by the company on age retirement but we use the tables? Or could it be that the fact that the BASIS is based on the tables => that retirement before 60 is not allowed?

Thanks, it helped.

 

M is the sum of Cs, and sums over all possible years of retirement for a single year of service. The C's are all 0 before age 60, so the M's are all the same up to age 60.

R is the sum of the M's and so R sums over all years of service.

My advice with this kind of question is to think about each year of service one at a time. Try to write down an expression for the year of service (40,41). Then think about how this will change for year of service (41,42), and so on.

Then at the end, sum over all years of service.

 

Edwin, to your last post, it's a big YES!!!!

 

Wow, cheers, thanx! I've been thinking a bunch of nonsense.