Question: Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one years time at age 66. Her salary is

Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one year’s time at age 66. Her salary is currently £55,000. Throughout her enrolment in the scheme, she has paid 8% of her salary, and this has been topped up by employer contributions and tax relief worth 4% of her salary. She will also qualify for a state pension of £9,000 per year. Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one year’s time at age 66. Her salary is currently £55,000. Throughout her enrolment in the scheme, she has paid 8% of her salary, and this has been topped up by employer contributions and tax relief worth 4% of her salary. She will also qualify for a state pension of £9,000 per year.

If Alice uses her whole pension fund to buy an index-linked annuity, how much income will she receive in her first year of retirement?

Step by Step Solution

★★★★★

3.42 Rating (158 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The drawdown may be a less attractive option for Alice because the mon... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

The U.S. Census Bureau occasionally surveys business owners and learns which firms are predominantly owned by women. These data are a portion of the results reported in 2010 from the 2007 Survey of...

George More is a participant in a defined contribution pension plan that offers a fixed-income fund and a common stock fund as investment choices. He is 40 years old and has an accumulation of...

What is the difference between a defined contribution pension plan and a defined benefit pension plan?

What is the difference between a defined contribution pension plan and a defined benefit plan? What benefits do employees receive from saving for retirement using 401(k) plans?

Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111)....

Ten people are on a life raft in the middle of the ocean. It is sinking and help is nowhere in sight. It has been determined that the raft is carrying too heavy a load and one person has to go...

Over the past several years, Gwen Fong has been able to save regularly. As a result, she has $54,188 in savings and investments today. She wants to establish her own business in five years and feels...

Jabara Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee's gross pay for each payroll period as the employee...

a. Evaluate the implications of the evidence you noted above. 1. What are the implications of your direct findings for fair presentation in the financial statements? You may assume that it is your...

Sunlight Equipment Manufacturers (SEM) makes barbecue equipment. The company has historically been very profitable; however, in the last year and a half, things have taken a turn for the worse due to...

Staci Valek began dabbling in pottery several years ago as a hobby. Her work is quite creative, and it has been so popular with friends and others that she has decided to quit het job is $3,800 per...

Identify the factors expanding the international capital market. What is meant by the term securitization?

WebTouch is a Fresno company that sells cell phones and PDAs on the Web. Web Touch has assistant managers for its digital and video cell phone operations. These assistant managers report to the...

[ - / 1 Points ] Find the derivative of the function. F ' ( x ) = , F ( x ) = ( 9 x 6 2 x 3 ) 4

You will assume the role of a financial analyst and be creating a full analysis between Coca-Cola and PepsiCo. Ensure that you fully explain all calculations and that you answer each and every...

Explain appropriate tactical marketing activities using IMC tools below for AVON to compete effectively against COVERGIRL.

2) Two 6-mm thick layers made of metal-A are brazed to a 6-mm thick center layer made of metal- B to form a 245-mm long bar having a 18x24-mm2 rectangular cross section. When the bar is subjected to...

Lincoln Corporation provides an incentive compensation plan under which its president receives a bonus equal to 10% of the corporation's income after income tax and the bonus. If income before tax...

A firefighting crew uses a water cannon that shoots water at 26.0 m/s at a fixed angle of 47.0 above the horizontal. The firefighters want to direct the water at a blaze that is 13.0 m above ground...

Solve Which of these equations can be reduced to a separable equation with the substitution O (a) y' = cos (") + 3 x + 2 O (b) y' = -2 xy+ 22 2 O (c) y' = " - ey- 2 O (d) None of these O (e)y' + 2xy...

Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one years time at age 66. Her salary is currently 55,000. Throughout her enrolment in the scheme, she has...