Exercise

# Pension calculations accounting for mortality

How does the present value change if you take mortality into account? The pension payments are then no longer guaranteed but depend on the survival of the recipient. The one-year survival probabilities `px`

have been preloaded as well as the variables `benefits`

, `discount_factors`

, `PV_65`

and `PV_20`

created in the previous exercise.

Instructions

**100 XP**

- Store the survival probabilities of a 65-year-old up to age 100 in the variable
`kpx`

. Make sure`kpx`

starts with a 1. - Calculate the EPV at age 65 of the pension taking mortality into account. Assign the result to
`EPV_65`

and compare the value to`PV_65`

which does not take mortality into account. - Discount the EPV at age 65 to the EPV at age 20 by taking both the interest rate of 3% and the survival of (20) to age 65 into account. Again, compare
`EPV_20`

to`PV_20`

.