Answer:
Yes an actuarial increase is necessary
Yes the benefits model is important
Explanation:
The actuarial increase is necessary because individuals who work past normal retirement age get increase in benefits paid. The implication of this is that benefits are increased to compensate for shorter time frame for payment of pension.
The defined benefits model is important because it can be used in calculation of retirement benefits for individuals that work past normal retirement age. The defined benefits model calculates retirement benefits based on factors such as earnings history of employee, age or duration of service. Three methods of defined benefits formula include:
flat benefit forrmula: benefits are calculated by multiplying number of years of service by a flat rate
Unit benefit formula: benefits are determined by tenure of service and salary earnings of employee
Variable benefits formula: benefits vary according to market performance
