Which of the following descriptions of the effect of using an actuarial method or assumption in...
Which of the following descriptions of the effect of using an actuarial method or assumption in the funding of a defined benefit pension plan is CORRECT?
a. If the average age of new employees goes down, the required employer contribution will go up.
b. If the actual cost of living increase in a year is the same as the plan assumption, the required employer contribution will decrease.
c. The higher the turnover rate assumed by the actuary, the lower the required annual employer contribution and cost.
d. The greater the assumed rate of return used by the actuary, the greater the projected total cost of the plan.
Homework Answers
c.
The higher the turnover rate assumed by the actuary, the lower the required annual employer contribution and cost.
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employees. The following data relate to the operation of the plan
for the year 2020 in which no benefits were paid. 1. The actuarial
present value of future benefits earned by employees for services
rendered in 2020 amounted to $56,100. 2. The company’s funding
policy requires a contribution to the pension trustee amounting to
$136,572 for 2020. 3. As of January 1, 2020, the company had a
projected benefit obligation...
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