I am confused by the Actual Vs Expected Return on Plan Assets section in Schweser: what is the difference and purpose of having beginning market related value and beginning fair value of plan assets?? I understand that actual return on assets ends up on the B/S and expected return on assets is used for reported pension expense but don’t understand why they’re calculated the way they are. can anyone simplify? thanks
Doesn’t it say somewhere in Schweser that the market related value is used to reduce volatility of the asset base on which the expected returns are calculated?
correct. They use expected return on expense to reduce the volatility in IS. They use actual retrun to get the FV.