Question on a practice test:
Which of the following is LEAST likely to be an input used in calculating the liability associated with a company’s defined benefit pension plan?
how many employees will leave the company before reaching
the expected return on investments that will be used to fund
the defined benefit plan
the salaries employees will be earning prior to their retirement
how long employees will live
Defined benefit plans promise fixed payments to retirees regardless of returns earned on plan assets.
The answer is B, so they are saying the returns one expects to generate are not part of calculating the liability. Is is the case that expected returns are only a factor after the liability has been determined? Thanks in advance.