For Pension Fund holders
Assumptions
Pension fund holders do not get grade and interest on the fund before retirement
Basic salary will not increase
Inflation rate is zero
Pension fund is not taxable
Life expectancy is 72 years
Retirement age is 63
If Service Period is
Initial Basic Salary is
Total Pension Fund Contribution for 30 years will be (3422*12*30)
If interest rate on fixed deposit will be 11% after retirement, then
Monthly pension after 30 years of service can be (0.11*1231920/12)
Total pension amount and fund after 72 years will be (11292.6*12*9 years + 1231920)
30 years
34220
1231920
11292.6
2451520.8
For Pensioners
Assumptions
Basic salary will not increase and there is no grade amount
Inflation rate is zero
Life expectancy is 72 years
Retirement age is 63
If Service Period is
Initial Basic Salary is
Pensioner will receive monthly pension (.90*34220)
30 years
34220
30798
Total pension amount after 72 years will be (30798*12*9+30798/2*9 (festival allowance))
3464775
Findings:
1. Uncertainty premium will be the difference between total pension amount of both category i.e. 3464775-2451520.8
2. Monthly pension (i.e. Rs. 11292.60) of pension fund holders will be for every generation in future
3. Pensioners can only receive pension for about 9 years in general and for limited years --the half of pension (by spouse)
4. Pension fund holders start receiving sure amount from the beginning at the time of lower level of uncertainty
5. Pensioners can only start receiving pension after retirement in old age beginning at the higher level of uncertainty
1013254.2