Reference no: EM132788171

1. You are a member of a defined contribution pension plan, and both you and your employer each contribute 5% of his salary of $60,000 each year. Your pension fund already amounts to $105,000 and you intend to retire at the end of another 5 years. If the contributions are made at the end of the year, your salary remains the same and the investment return is 7%.

What will be the total savings in your pension fund at retirement?

2, 3. Shirlyn works for Grapes Inc. She is a member of their defined contribution pension plan (DCPP). She has been a member of this plan for 10 years and has accumulated $80,000 in the plan to date. She is 36 years old now and plans to retire when she turns 65 years of age. The pension plan is based on both the employee and employer contributing 5% of pensionable earnings at the end of each year. This year her pensionable earnings are $75,000 and she is earning 6% on her savings in the plan.

Assume the following:

• her pensionable earnings will not change
• the contribution rates will not change
• her pension is not integrated with the CPP or QPP
• contributions are made at the end of each year

1. What is the total contribution to Shirlyn's pension for the current year?

2. How much will Shirlyn have in her pension plan on retirement?