Sorry if this has been addressed, I’m only relooking at it now. Under CFAI, on page 104, there was some errata fixes but it says, “Pension obligation minus plan assets equals beginning net funded position. If underfunded, economic liability; if overfunded, economic assets” In Schweser, on page 172, the funded status is Assets - PBO. Is this an error? It makes more sense to me that funded status equals Assets - PBO More tidbits to remember, Accordingly, under Schweser Change in Funded Status - employer contributions = economic pension expense REMEMBER THAT NEGATIVE SIGNIFIES A POSITIVE EXPENSE Under CFAI, Change in Funded status + employer contributions = economic expensive (remember they say funded status is PBO - assets) POSITIVE NUMBER SIGNIFIES POSITIVE EXPENSE
PBO-assets to equal funded status is wrong. Assets-PBO=funded status A positive/surplus would be when the assets are over the PBO.
tvPM check the CFAI. I know, it’s not intuitive!
PBO minus assets will more often be -ve -> bcos assets may never match up to liabilities. calling it (a-b) or (b-a) does not make things wrong… just know if Liabs are greater than assets - you have a net Liab. position. and are you going to go and call the kettle (CFAI) black bcos they use PBO - Assets - and that is what they want you to know (by all means do it after the exam)… but keep with their convention for the next 18 days and a bit.
Just think logically. How much did it cost us? The difference in the funded status, plus how much we paid into the fund.