Simulation of defined benefit plan modeling
| Order ID |
53563633773 |
| Type |
Essay |
| Writer Level |
Masters |
| Style |
APA |
| Sources/References |
4 |
| Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
Simulation of defined benefit plan modeling
A defined benefit plan (DBP) is a retirement plan in which the employer promises to pay a certain benefit to the employee upon retirement. The benefit is typically calculated based on the employee’s salary and years of service. DBPs are often funded by the employer, but some plans may also require employee contributions.
Modeling a DBP is the process of estimating the future cost of the plan. This is important for employers to ensure that they have sufficient funds to meet their obligations to retirees. There are a number of factors that need to be considered when modeling a DBP, including:
The number of active and retired employees
The salaries of active employees
The expected retirement ages of active employees
The expected life spans of retirees
The investment returns of the plan’s assets
Simulation is a powerful tool that can be used to model DBPs. Simulation involves running a large number of trials, each of which represents a possible future outcome for the plan. The results of the trials can then be used to estimate the probability of different outcomes and the expected cost of the plan.
There are a number of different software packages that can be used to simulate DBPs. Some of the most popular packages include:
Prophet
Orion
DBSim
These packages typically allow users to input a variety of data about the plan, including the number of active and retired employees, the salaries of active employees, the expected retirement ages of active employees, the expected life spans of retirees, and the investment returns of the plan’s assets. The packages then use this data to run a large number of trials and estimate the probability of different outcomes and the expected cost of the plan.
Simulation is a valuable tool for employers who want to understand the future cost of their DBPs. By using simulation, employers can identify potential risks to the plan and take steps to mitigate those risks. Simulation can also be used to evaluate different funding strategies and to determine the optimal level of funding for the plan.
Here is an example of how simulation can be used to model a DBP. Let’s say that a company has a DBP with 100 active employees and 50 retired employees. The average salary of active employees is $100,000 and the average retirement age is 65. The expected life span of retirees is 85. The investment returns of the plan’s assets are expected to be 7% per year.
We can use simulation to estimate the probability of different outcomes for the plan. For example, we could estimate the probability that the plan will have sufficient funds to meet its obligations to retirees. We could also estimate the expected cost of the plan over the next 30 years.
To do this, we would run a large number of trials, each of which would represent a possible future outcome for the plan. In each trial, we would randomly generate the salaries of active employees, the retirement ages of active employees, the life spans of retirees, and the investment returns of the plan’s assets. We would then use these values to calculate the cost of the plan over the next 30 years.
After running a large number of trials, we would be able to estimate the probability of different outcomes for the plan. For example, we might find that there is a 95% probability that the plan will have sufficient funds to meet its obligations to retirees. We might also find that the expected cost of the plan over the next 30 years is $1 billion.
This information would be valuable to the company’s management team. They could use it to make decisions about the plan’s funding strategy and to ensure that the plan is financially sound.
Simulation of defined benefit plan modeling
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| Content (worth a maximum of 50% of the total points) |
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30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
| Use of Sources (worth a maximum of 20% of the total points). |
Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. |
5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. |
10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
| Grammar (worth maximum of 20% of total points) |
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5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors |
10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors |
15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. |
20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. |
| Structure of the Paper (worth 10% of total points) |
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5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper |
7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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