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Alex has averaged $70,000 per year for the last 5 years working as an actuary for...

Alex has averaged $70,000 per year for the last 5 years working as an actuary for NML. under NMLs defined benefit plan using 7 year vesting, employees earn a retirement equal to 3.5% of the average for their three highest annual salaries per year of service. Alex has been employed for 5 full years. How much is Alex's vested benefit (annual retirement benefit) he has earned so far?

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Answer #1

Average salary = $70000

Alex will get vested benefits if he completes 7 years of services as per NML policy. but Alex just completed 5 years.

Assuming $70000 is average for their three highest annual salaries per year of service as additional information is not given .

Alex's vested benefit = Average salary * retirement benefit per year

= $70000 * 3.5% = $2450

He worked for 5 years so-

Alex's vested benefit (annual retirement benefit) he has earned so far (in 5 years)

=$2450 * 5= $12250

Discounting factor is not given in the question so we assume that it’s just asking for future value of the benefits.

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