Why is current service cost discounted one period less than pension obligation?

CFA Level II FRA
#1

So in this problem the only employee in this pension plan will retire in 5 years. So to get the pension obligation the earned benefits are discounted back by 5 years. The interest cost is then the pension obligation times the discount rate.

But then the confusing part for me is that the current service cost is the annual unit credit discounted by 4 periods. Why 4 instead of 5?

#2

If you begin the computation with exactly 5 years remaining until the payment of benefits, you will need to:

  1. compute the penson obligation at the beginning of the period (when the benefit payment is still 5 years away), hence discounting the benefts earned over 5 years,

  2. apply the discount rate to the opening obligation to get the interest expense for the year,

  3. compute the curent service cost earned over the course of the yar BUT the assumption is that you are doing this at the end of the year, when there are just 4 years left until payment. hence you discount the annual unit credit over 4 years, not 5.

#3

I see. Thanks very much!