UK pension changes in 2015: some mathematical considerations

Journal article

Stubbs, John and Adetunji, Jacob 2016. UK pension changes in 2015: some mathematical considerations. The Mathematical Gazette. https://doi.org/10.1017/mag.2016.55
AuthorsStubbs, John and Adetunji, Jacob
Abstract

This paper presents a mathematical treatment of some of the changes made to pension arrangements by the UK government in 2015. A mathematical model of a pension fund is developed based on three variables: life expectancy of pensioner, interest rates on investments and rates of inflation. The model enables a prospective pensioner to decide, at point of retirement and on the basis of predicted income streams, whether to opt for, (i) a (life) annuity or a draw down scheme, (ii) an inflation proofed (index linked) income or a fixed income and (iii) an immediate income or a deferred income. Numerical examples are provided to add clarity to the financial options available at retirement. On the basis of the numerical examples given, the paper concludes by urging caution on the part of the pensioner before taking an annuity rather than a draw down scheme, an index linked rather than a fixed income and a deferred rather than an immediate pension income. UK pension changes in 2015: some mathematical considerations.

This paper presents a mathematical treatment of some of the changes made to pension arrangements by the UK government in 2015. A mathematical model of a pension fund is developed based on three variables: life expectancy of pensioner, interest rates on investments and rates of inflation. The model enables a prospective pensioner to decide, at point of retirement and on the basis of predicted income streams, whether to opt for, (i) a (life) annuity or a draw down scheme, (ii) an inflation proofed (index linked) income or a fixed income and (iii) an immediate income or a deferred income. Numerical examples are provided to add clarity to the financial options available at retirement. On the basis of the numerical examples given, the paper concludes by urging caution on the part of the pensioner before taking an annuity rather than a draw down scheme, an index linked rather than a fixed income and a deferred rather than an immediate pension income.

UK pension changes in 2015: some mathematical considerations.

KeywordsUK Pension; Deferment; Annuity; Pension defferal; Fixed income; Index-linked income; Draw-down scheme
Year2016
JournalThe Mathematical Gazette
PublisherCambridge University Press
ISSN00255572
20566328
Digital Object Identifier (DOI)https://doi.org/10.1017/mag.2016.55
Web address (URL)http://hdl.handle.net/10545/621576
hdl:10545/621576
Publication dates14 Jun 2016
Publication process dates
Deposited02 May 2017, 15:07
Rights

Archived with thanks to The Mathematical Gazette

ContributorsUniversity of Derby
File
File Access Level
Open
Permalink -

https://repository.derby.ac.uk/item/930yz/uk-pension-changes-in-2015-some-mathematical-considerations

Log in to edit

Download files

  • 39
    total views
  • 0
    total downloads
  • 3
    views this month
  • 0
    downloads this month

Export as

Related outputs

Trevorite: Ni-rich spinel formed by metasomatism and desulfurization processes at Bon Accord, South Africa?
O'Driscoll, Brian, Clay, Patricia L., Cawthorn, R. Grant, Lenaz, Davide, Adetunji, Jacob and Kronz, Andreas 2014. Trevorite: Ni-rich spinel formed by metasomatism and desulfurization processes at Bon Accord, South Africa? Mineralogical Magazine. https://doi.org/10.1180/minmag.2014.078.1.11
Explainer: what dust from the Sahara does to you and the planet
Adetunji, Jacob 2016. Explainer: what dust from the Sahara does to you and the planet. The Conversation.
Low temperature, authigenic illite and carbonates in a mixed dolomite-clastic lagoonal and pedogenic setting, Spanish Central System, Spain
Huggett, Jennifer, Cuadros, Javier, Gale, Andrew S., Wray, David and Adetunji, Jacob 2016. Low temperature, authigenic illite and carbonates in a mixed dolomite-clastic lagoonal and pedogenic setting, Spanish Central System, Spain. Applied Clay Science. https://doi.org/10.1016/j.clay.2016.06.016
57Fe Mössbauer spectroscopy investigations of iron oxidation states in the Harmattan dust nutrient contribution to West African soils
Adetunji, Jacob 2014. 57Fe Mössbauer spectroscopy investigations of iron oxidation states in the Harmattan dust nutrient contribution to West African soils. Atmospheric Environment. https://doi.org/10.1016/j.atmosenv.2014.09.025
Mineralogical and geochemical characterisation of warm-water, shallow-marine glaucony from the Tertiary of the London Basin
Huggett, Jennifer, Adetunji, Jacob, Longstaffe, Fred and Wray, David 2017. Mineralogical and geochemical characterisation of warm-water, shallow-marine glaucony from the Tertiary of the London Basin. Clay Minerals. https://doi.org/10.1180/claymin.2017.052.1.02
Archaean chromitites show constant Fe 3+ /ΣFe in Earth's asthenospheric mantle since 3.8 Ga
Rollinson, Hugh, Adetunji, Jacob, Lenaz, Davide and Szilas, Kristoffer 2017. Archaean chromitites show constant Fe 3+ /ΣFe in Earth's asthenospheric mantle since 3.8 Ga. Lithos. 282-283, pp. 316-325. https://doi.org/10.1016/j.lithos.2017.03.020
Ionic Radii
Rollinson, Hugh and Adetunji, Jacob 2017. Ionic Radii. in: White, W. M. (ed.) Encyclopedia of Geochemistry: A Comprehensive Reference Source on the Chemistry of the Earth New York Springer International Publishing. pp. 1-6
Highly refractory Archaean peridotite cumulates: Petrology and geochemistry of the Seqi Ultramafic Complex, SW Greenland
Szilas, Kristoffer, van Hinsberg, Vincent J., McDonald, Iain, Næraa, Tomas, Rollinson, Hugh, Adetunji, Jacob and Bird, Dennis 2017. Highly refractory Archaean peridotite cumulates: Petrology and geochemistry of the Seqi Ultramafic Complex, SW Greenland. Geoscience Frontiers. 9 (3), pp. 1-26. https://doi.org/10.1016/j.gsf.2017.05.003
Comment on ‘Podiform chromitites do form beneath mid-ocean ridges’ by Arai, S. and Miura, M.
Rollinson, Hugh and Adetunji, Jacob 2016. Comment on ‘Podiform chromitites do form beneath mid-ocean ridges’ by Arai, S. and Miura, M. Lithos. 254-255, pp. 131-133. https://doi.org/10.1016/j.lithos.2015.10.023
Chromite in the mantle section of the Oman Ophiolite: Implications for the tectonic evolution of the Oman Ophiolite
Rollinson, Hugh and Adetunji, Jacob 2015. Chromite in the mantle section of the Oman Ophiolite: Implications for the tectonic evolution of the Oman Ophiolite. Acta Geologica Sineca. 89 (Supp.2), pp. 73-76. https://doi.org/10.1111/1755-6724.12308_44
The geochemistry and oxidation state of podiform chromitites from the mantle section of the Oman ophiolite: A review
Rollinson, Hugh and Adetunji, Jacob 2015. The geochemistry and oxidation state of podiform chromitites from the mantle section of the Oman ophiolite: A review. Gondwana Research. 27 (2), pp. 1-12. https://doi.org/10.1016/j.gr.2013.07.013
Determination of Fe3+/ΣFe ratios in chrome spinels using a combined Mössbauer and single-crystal X-ray approach: application to chromitites from the mantle section of the Oman ophiolite
Lenaz, Davide, Adetunji, Jacob and Rollinson, Hugh 2014. Determination of Fe3+/ΣFe ratios in chrome spinels using a combined Mössbauer and single-crystal X-ray approach: application to chromitites from the mantle section of the Oman ophiolite. Contributions to Mineralogy and Petrology. 167 (958), pp. 1-17. https://doi.org/10.1007/s00410-013-0958-2