Optimal Discounted Portfolio, Expected Wealth and Strategic Consumption for a Defined Contribution Pension Scheme

C. I. Nkeki

Optimal Discounted Portfolio, Expected Wealth and Strategic Consumption for a Defined Contribution Pension Scheme

C. I. Nkeki * §

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University of Benin

Optimal Discounted Portfolio, Expected Wealth and Strategic Consumption for a Defined Contribution Pension Scheme

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Abstract

This paper deals with optimal discounted portfolio, expected wealth and strategic consumption process for a defined contribution (DC) pension scheme. The aims of this paper are to find: the optimal discounted portfolio and optimal discounted consumption choice to be adopted by the pension plan member (PPM) up to retirement period; the expected discounted wealth and variance of the expected wealth for the plan member. The financial market is composed by a riskless and a risky assets, and the effective salary of the plan member is assume to be stochastic. The expected discounted wealth and its variance are obtained. The discounted portfolio and consumption processes of the plan member are obtained. It is find that part of the discounted portfolio value is proportional to the ratio of the present value of the discounted expected future contributions to the optimal discounted wealth value overtime. It is also find that there is the need for gradual transfer of part of the portfolio value in risky asset to the riskless one against unforeseen shocks.

Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

C. I. Nkeki. 2013. "Optimal Discounted Portfolio, Expected Wealth and Strategic Consumption for a Defined Contribution Pension Scheme". Global Journal of Science Frontier Research - F: Mathematics & Decision GJSFR-F Volume 13 (GJSFR Volume 13 Issue F7).

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GJSFR Volume 13 Issue F7

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Journal Specifications

Crossref Journal DOI 10.17406/GJSFR

Print ISSN 0975-5896

e-ISSN 2249-4626

Keywords

defined contribution optimal discounted portfolio pensi pension plan member stochastic salary Strategic discounted consumption unforeseen shocks

Classification

GJSFR-F Classification MSC 2010: 91G10

Submission ReceivedJuly 8, 2013
Peer Review Double Blind
Handling Editor
Accepted August 5, 2013
Published August 19, 2013

Version of record

v1.2

Issue date

August 28, 2013

Language

English

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Article Matrices

Total Score: 145

Country: Nigeria

Subject: Global Journal of Science Frontier Research

Authors: C. I. Nkeki (PhD/Dr. count: 0)

View Count (all-time): 239

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Publish Date: 2013 08, Mon

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Total Views: 1.5K

Total Downloads: 71

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