The normal form of a pension benefit pays a life annuity to those retiring in years up to and including 1996, and a life annuity with 50% continuing to a surviving spouse for those retiring after 1996. We are given that / = .09 and that 75% of employees are married, and we will assume that the spouse is always the same age as the participant. Retirement occurs at age 65.

The present value of all future benefits on January 1, 1997, is 10,000,000 for active participants and 2,000,000 for retired participants. Given a^^ — 8 and d(^^\^ = 6.5, find the increase in the present value as of January 1 , 1 997, of future benefits due to the change in the normal form.