Salary scales and salary functions for pension valuation

• Main Authors: Medina, Mychel Lawrent S., Moya, Joseph David A.
• Format: text
• Language: English
• Published: Animo Repository 1999
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/16569
• Institution: De La Salle University

This thesis investigated salary functions and their use in the valuation of pension plans. The ideas presented here may be useful to pension actuaries moreover, researchers in actuarial science may find this thesis interesting. The main conclusions of this thesis is that salary scales, derived through parametric methods could serve as an alternative to using traditional nonparametric salary scales. This thesis started with defining the salary function as an accumulation function based on inflation and merit or seniority. Then, it utilized traditional estimation methods to generate salary scales based on the definition of the salary function. a parametric age-based model for the salary function was then presented. Finally, real pension plan data was applied to illustrate the use of the parametric and nonparametric salary functions in the computation of future salaries and pension costs under the Entry-Age Normal funding method.