Question
JANGALA is a Government Employee who earns a salary of Tshs 3,500,000 per month of which 10% is invested in a pension fund. The contributions
JANGALA is a Government Employee who earns a salary of Tshs 3,500,000 per month of which 10% is invested in a pension fund. The contributions to the fund are made over 35 years, and the average rate of return on the fund is 6% per year in real terms (i.e. allowing for inflation). The JANGALA expected life expectancy at retirement is 20 years. The real rate of return on government bonds at the time of retirement is 3%. Required: (i) What would be the expected value of pension fund after 35 years? (5 Marks) (ii) What annual pension (annuity) will JANGALA receive during 18 years of retirement period? (5 Marks
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