Hi Brave AFers,
CFAI states that the liquidity requirement for a DB plan = PAYMENTS TO BENEFICIARIES - CONTRIBUTIONS FROM SPONSOR.
I thought that we should start with PENSION INCOME from the fund and then if is lower than PAYMENTS TO BENEFICIARIES, then yes it is time for the sponsor to get in with CONTRIBUTIONS.
they assume that the plan is not earning any income ??? because they start first with sponsor contributions and leave the rest for a net outflow that will be covered by the fund’s assets. What about the pension income expected?
Can anyone please help me with their view?
many thanks and all the best for everyone