Hi all, Has anyone come across a situtation wherein they have used different formulas and got different answers? in sample exam? S
also include the participant contributions…
CP - you must be referring to a DC plan if you are talking participant contributions. But why would there be a calc for econ pension expense for a DC plan? It is simply the employer match/contribution, right?
chi - this was a peculiar question in the sample - where they had a contribution due to participants - which was being deducted during calculation of both PBO and Plan assets end value, starting from beginning value. If you went Delta Funded Status + Employer Contributions you got a figure A. If you went Delta PBO + Benefits Paid - Actual return on Plan Assets => you got a figure B. different from A, and the only difference between this and all other pension problems encountered thus far - is the presence of the Participant contributions. Essentially Participant contributions was “Reducing” the liability - and hence must be used to offset the Economic Pension expense.
i dunno about you CP but i’m throwin that sample question out
Yikes, peculiar is right. That really stretches the definition of a defined benefit plan, where there really is no participants - just beneficiaries. If this was a schweser question I think I would just pretend I never saw it, but the fact that this was in a CFA sample (I assume that is what you mean) is disconcerting to say the least.