Using the stochastic investment model propose by Wilkie (1995), this paper simulates the progress of a specimen final salary pension scheme over a period of 25 years. Salary experience over the projection period is also assumed to be stochastic. The specimen scheme is assumed to be stable during the projection period with respect to age, pensionable salary in real terms and past pensionable service. Regular deterministic valuations of the scheme are conducted during the projection period to determine the curr…
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