Determining optimal contribution levels of defined contribution pension plan in Kenya
Date
2015-12
Authors
Ndereba, Maureen Ngugi
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
This study seeks to determine optimal contribution level required in a Defined Contribution Pension Plan so as to be adequate for the life of the retiree on retirement. The objective is to determine the contribution of the working adult through his working years, as a factor of inflation over the working years, salary increment, investment of the fund and number of working years, so as to achieve the optimal contribution to be adequate for the life of the retiree. The life expectancy of the retiree is derived using the Curtate Life Expectancy. Assets of the fund are invested in stocks. Salary is increasing half times that of the inflation rate. The optimization is done under a budget constraint that guarantees the actuarial equilibrium between the current asset and future contributions and benefits
Description
Submitted in partial fulfillment of the requirements for the Degree of Bachelor of Business Science in Financial Economics at Strathmore University
Keywords
Defined Contribution, Optimal contribution, Pension plan