👉 Pensions math revolves around calculating the future value of a pension plan, which is a financial arrangement where employees receive regular payments after retirement. The core concept involves projecting future contributions, estimating life expectancies, and discounting future payments to their present value. Actuaries use mathematical models to determine the required contributions from employers or employees to ensure the pension fund remains solvent over time. Key factors include the plan's investment returns, inflation rates, mortality tables (to estimate how long beneficiaries will live), and the chosen discount rate, which reflects the time value of money. By balancing these elements, actuaries ensure that the pension fund can meet its future obligations while maintaining financial stability. This process involves complex calculations, often using formulas like the present value of annuity formula and stochastic modeling to account for uncertainties.
