Heidi Jackson Has a Twin Brother,Phil,who Works for the Government

question 23

Essay

Heidi Jackson has a twin brother,Phil,who works for the Government of Alberta.Phil is covered by a defined benefit pension plan.Phil just turned 45 years old,and expects to retire at age 65.At that time,the pension plan will pay Phil annual pension payments equal to 2% of his final year's salary for each year of services rendered.The pension payments will continue until Phil's death,which actuaries expect to be when he turns 95 years old.For the current year,Phil will earn $55,000,and this rate is expected to increase by 5% per year.Assume that the Alberta Government uses a 10% interest rate for its pension obligations.
Requirement:
Determine the current service cost for Phil Jackson's pension for the past year (the year just before he turned 45).

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Definitions:

Sociology

The study of social behavior, society, patterns of social relationships, social interaction, and culture that surrounds everyday life.

Negative Checks

Mechanisms that decrease a population's size, such as disease, famine, or war, as described in Malthusian theory.

Armed Conflict

A conflict involving the use of armed forces between two or more parties, typically countries or groups within a country.

Industrialization

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods, leading to technological innovation and changes in society.