Oh no!!!! Pensions are going to be my undoing!

Started FSA last week and what a COMPLETE NIGHTMARE it is! I actually feel STUPID coz I keep reading the lines, but I am not getting it. I read the CFA text and the Schweser text on pensions and initially felt that I was sort of understanding it…then looked at the EOC questions and it was like I’d never even heard of this stuff. I am really frustrated, this is the first time I encounter something in the CFA that I am totally not understanding and feel like I have no hope of ever understanding. I have decided to move on to Multinationals with the faint hope that I will do better there… Once I finish FSA (which could take a while judging by how things are going so far), I “only” have corporate finance, portfolio management and derivatives left, then I am through the curriculum once. But I can’t say that I actually feel like I remember a whole lot of the stuff that I have read so far! Just having a terrible time of it right now :frowning:

relax it’s february, you have plenty of time. understanding and retaining the more complex topics takes a few run throughs.

This was a real “WTF” moment for me when I first encountered it… and I think this is a perfect example where the study notes are very sub par…Schweser really presented it in a different manner than the texts and reason for my undoing in 2009. I would focus on the CFAI text and the EOC questions. Void the study notes until you fully grasp those EOC questions and I promise it will click after a few reads and then rely on the study notes as a refresher and keep repeating the EOC questions. …Bad news Derivatives will be more painful and more heavily tested (in my opinion) than pension accounting. Be sure you have you “A” game for derivatives. Good News , Corp Finance, Portfolio MGT and the rest of FRA is pretty straight forward and less stressing. (Yes you should be able to breeze through the rest of FRA after pension) Good Luck.

I had the same experience with pension accounting. What helped for me was getting out the accounting book and reviewing pension accounting entries (basic terms) before rereading the CFA text. The CFA text does a poor job of explaining the underlying accounting IMO.

Pension accounting is nuthin, dude. Did you do Quant?

I agree that the EOC questions at the end of Pensions didn’t result in a warm fuzzy. Accounting textbooks include graphics that help you frame the concepts in your mind. I’ve noticed that the CFAI writers, particularly for FSA, don’t feel the need to either write well, or to include explanatory graphics. Turn your mind to Corp Fin or PM for a while to regain the feeling of control. Then if you have Schweser or Stalla supplements, do the end of reading section problems for Pensions from your supplement book. I’m betting that they’re going to be less off-putting than the CFAI’s EOCs. I hope that the following isn’t in violation of posting rules. There is a 9min 48 sec Level 2 video lecture from AllenResources on Youtube.com on the topic of Pensions. It is here: http://www.youtube.com/watch?v=w4Il5i7MXls Thus, if you haven’t paid for Stalla or Schweser vids, AllenResources has provided some free ones. I haven’t looked through most of them, but I thought this Pensions vid helped the concept to gel.

Damil4real Wrote: ------------------------------------------------------- > Pension accounting is nuthin, dude. Did you do > Quant? I found quant to be better written and therefore easier to understand than pension accounting. Plus, pension accounting is outdated (no Companies have DB plans anymore, so it is painful topic).

In general companies aren’t initiating new DB plans, but legacy plans exist and we’re responsible for knowing how to interpret them. Thus, DB plans are still relevant.

Pension accounting is nothing but a TVM problem. PBO/ABO/VBO/Int cost/Svc Cost = are all PV of CFs Pension expense = Int cost+svc cost- Exp(ROA) Pension cost is accounted as an op expense but svc cost is not- so adjustment is reqd. Memorize formulae for: Plan Assets -uses Actual ROA PBO - PV of pension obligations - takes into a/c future salary increases Pension expense uses Expexted ROA Economic expense - uses Actual ROA Know how to adjust B/S for GAPP v/s IFRS And the effects of: 1. discount rate - this should be easy if you know TVM 2. future salary increases- same as #1 3. Exp ROA- use common sense.

thommo77 Wrote: ------------------------------------------------------- > Damil4real Wrote: > -------------------------------------------------- > ----- > > Pension accounting is nuthin, dude. Did you do > > Quant? > > > I found quant to be better written and therefore > easier to understand than pension accounting. > Plus, pension accounting is outdated (no Companies > have DB plans anymore, so it is painful topic). Quant gives me a headache almost everytime I work throughout, a literal headache. Pension acct sucked but overall I felt FSA wasn’t that bad. I pray quant is going to be on the favorable end of that 5-10% scale

I have to admit that Quant was actually quite easy for me - I have seen it twice before during my BA and my MSC and I have been using some of the concepts during my work since. So no problems there. But my accounting classes in uni seem like a really long way back right now hahaha

thommo77 Wrote: ------------------------------------------------------- > Damil4real Wrote: > -------------------------------------------------- > ----- > > Pension accounting is nuthin, dude. Did you do > > Quant? > > > I found quant to be better written and therefore > easier to understand than pension accounting. > Plus, pension accounting is outdated (no Companies > have DB plans anymore, so it is painful topic). There are still a few for profit companies that have a DB. Most of them have abandoned it though. That being said, it’s still very applicable for NFP entities.

kingstongal Wrote: ------------------------------------------------------- > I have to admit that Quant was actually quite easy > for me - I have seen it twice before during my BA > and my MSC and I have been using some of the > concepts during my work since. So no problems > there. But my accounting classes in uni seem like > a really long way back right now hahaha Jamaincan me crazy Kingstongal