Question: A company has a diverse workforce that principally is comprised of African-Americans and Asian-Americans. According to actuarial statistics, its African-American employees will live 7 years

A company has a diverse workforce that principally is comprised of African-Americans and Asian-Americans. According to actuarial statistics, its African-American employees will live 7 years post-retirement, while its Asian-American employees will live 12 years post-retirement. All employees receive $10,000 per year as pension benefits. At an applicable discount rate determined by company actuaries, the present value factor for a 7-year annuity is 5.60 and the present value factor for a 12-year annuity is 8.40.
a. If the company wants to give the same pension benefits to its African-American employees that it gives to its Asian-American employees in economic value, what amount of annual pension benefit should the company pay to its African-American employees?
b. Do you see any difficulties in administering such a plan?
c. Does Aristotle's philosophy of distributive justice require the company to make this adjustment to annual pension benefits?

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a As of the date of expected retirement the present value of a typical AsianAmericans pension is 840 ... View full answer

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