pensions

Question 1

Contributory

Non contributory

Funded

Answer 1

EMployee must contribute

Only company contributes

employer makes cash contributions

Question 2

Overfunded Plan

Underfunded

Answer 2

Assets exceed liabilities

Liabilities exceed assets

Question 3

Defined Contribution Plan

Answer 3

Specifies PERIODIC AMOUNT of contributions

Question 4

Defined Benefit Plan

Answer 4

defines the BENEFITS TO BE PAID at retirement

**ACTUARIAL ASSUMPTIONS

Question 5

ABO

PBO

Answer 5

uses current and past salary

Uses future (guess) salary

Question 6

Formula to find actual return on plan assets

Answer 6

Beginning FV
\+contributions
\+actual returns
- benefits paid
=ending FV

Question 7

Formula to find PBO

Answer 7

Beginning PBO
\+service cost
\+interest cost
\+prior service cost
\+actuarial losses
-actuarial gains
-benefits paid 
= ending PBO

Question 8

what is net periodic cost SIRAGE

Answer 8

increase in PBO during the period

Question 9

SIRAGE

Answer 9

S= current service cost
I = interest cost
(R)= (return on plan assets)
A= amortization of prior service cost
(G)= (gains) losses
E= amortization of existing obligations`

Question 10

how to find interest cost

Answer 10

beginning PBO
X discount rate
= interest cost

Question 11

how to find EXPECTED return on plan assets

Answer 11

beginning FV of plan assets
X expected rate of return
= expected return on plan assets

• difference between actual and estimated return is recorded in OCI and amortized into expense

Question 12

net defined benefit liability (IFRS)

Answer 12

difference between the defined benefit obligation and the FV of plan assets adjusted for pension gain/loss and service cost

Question 13

how to find amortization of prior service costs

Answer 13

beginning unrecognized prior service cost / average remaining service life
= amortization

Question 14

how to find amortization of unrecognized gains/losses using the CORRIDOR APPROACH

Answer 14

unrecognized gain/loss
greater
=excess
excess/avg remaining service life
= amortization of gain loss

Question 15

pension settlements

Answer 15

when plan assets grow to a point where they can sell them to purchase an annuity contract to satisfy pension obligations

Question 16

curtailments

Answer 16

events that reduce expected remaining year of service

Question 17

termination benefits

Answer 17

employees are paid to terminate their future pension payments

Question 18

Pension Benefits standalone financial statements include

Answer 18

1) net assets available
2) changes in net assets available
3) accumulated benefits
4) changes in acc benefits

*SOCF not required but may help

Question 19

APBO

Answer 19

Accumulated Postretirement Benefit Obligation

*PV of the future benefits that have vested as of the measurement date

Question 20

EPBO

Answer 20

Expected Postretirement Benefit Obligation.

• PV of the future benefits EXPECTED to be paid

Includes:

1) the vested amount (APBO)
2) the expected amount not vested yet

Question 21

what method is used to calculate PBO

Answer 21

benefit years of service method