A man aged 55 exact has accumulated a lump sum of 50, 000 to buy a deferred annuity, payable quarterly in arrears from his retirement age of 65 until he dies. If he dies before reaching his retirement age, the lump sum used to purchase the deferred annuity is returned immediately on death without interest.

1. (a) Calculate the amount of the quarterly annuity that this man can buy on the following basis: [12 marks]

   Mortality: AM92 (ultimate) before retirement and PMA92C20 after retirement Interest: 4% per annum effective Initial expenses: 3% of the purchase price Renewal expenses: nil

2. (b) Calculate the prospective net premium reserve (to nearest ) after 10 years, assuming that the reserving basis is the same as pricing basis. [3 marks]

   [Total 15 marks]