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A simulation model to analyze the behavior of a faculty retirement plan: a case study in Mexico

Author

Listed:
  • Marco Antonio Montufar-Benítez

    (Universidad Autonoma del Estado de Hidalgo)

  • Jaime Mora-Vargas

    (Tecnologico de Monterrey)

  • Carlos Arturo Soto-Campos

    (Universidad Autonoma del Estado de Hidalgo)

  • Gilberto Pérez-Lechuga

    (Universidad Autonoma del Estado de Hidalgo)

  • José Raúl Castro-Esparza

    (Universidad Cristobal Colon)

Abstract

The main goal in this study was to determine confidence intervals for average age, average seniority, and average money-savings, for faculty members in a university retirement system using a simulation model. The simulation—built-in Arena—considers age, seniority, and the probability of continuing in the institution as the main input random variables in the model. An annual interest rate of 7% and an average annual salary increase of 3% were considered. The scenario simulated consisted of the teacher and the university making contributions, the faculty 5% of his salary, and the university 5% of the teacher’s salary. Since the base salaries with which teachers join to university are variable, we considered a monthly salary of MXN 23 181.2, corresponding to full-time teachers with middle salaries. The results obtained by a simulation of 30 replicates showed that the confidence intervals for the average age at retirement were (55.0, 55.2) years, for the average seniority (22.1, 22.3) years, and for the average savings amount (329 795.2, 341 287.0) MXN. Moreover, the risk that a retiree of 62 years of age and more of 25 years of work, is alive after his savings runs out is approximately 98% and this happens at 64 years of age.

Suggested Citation

  • Marco Antonio Montufar-Benítez & Jaime Mora-Vargas & Carlos Arturo Soto-Campos & Gilberto Pérez-Lechuga & José Raúl Castro-Esparza, 2025. "A simulation model to analyze the behavior of a faculty retirement plan: a case study in Mexico," Computational Statistics, Springer, vol. 40(6), pages 2981-3006, July.
    • Handle: RePEc:spr:compst:v:40:y:2025:i:6:d:10.1007_s00180-024-01456-7
    DOI: 10.1007/s00180-024-01456-7
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    References listed on IDEAS

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    1. Auerbach, Alan J. & Lee, Ronald, 2011. "Welfare and generational equity in sustainable unfunded pension systems," Journal of Public Economics, Elsevier, vol. 95(1), pages 16-27.
    2. Chalmers, John & Johnson, Woodrow T. & Reuter, Jonathan, 2014. "The effect of pension design on employer costs and employee retirement choices: Evidence from Oregon," Journal of Public Economics, Elsevier, vol. 116(C), pages 17-34.
    3. Carter, Lawrence R. & Lee, Ronald D., 1992. "Modeling and forecasting US sex differentials in mortality," International Journal of Forecasting, Elsevier, vol. 8(3), pages 393-411, November.
    4. Mielczarek, Bożena, 2013. "Simulation model to forecast the consequences of changes introduced into the 2nd pillar of the Polish pension system," Economic Modelling, Elsevier, vol. 30(C), pages 706-714.
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    1. David Fernando Muñoz & Verónica Andrea González-López & Jürgen Symanzik, 2025. "Editorial on the special issue on the V Latin American conference on statistical computing," Computational Statistics, Springer, vol. 40(6), pages 2849-2856, July.

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