Pensions

CFA Level II FRA
#1

I just spent the last few days reading through Reading 20 on Pensions and am still having difficult remembering all the concepts?

Does anyone have any advice for retaining all of this information?

#2

If this is the case then you are amongst the 90% of candidates who rate this LOS as the most difficult in whole of CFA (level 1-3). I’m not there yet (going through intercorporate investments) but i’ve already received health warnings on the same from many of my friends and those who have cleared level 2.

Dont get upset with the retention ratio, lol, and go through curriculum problems and solve them. I’m right behind you.

#3

I remember having issue with that topic as well. mwtv came up with a really cool analogy of looking at pension expense as indirect method of calculating cash flows. just search for his posts - they were super helpful.

#4

Although I am a big believer in reading the CFAI curriculum, this reading is very poorly written (at least it was in 2011). Here, I really recommend jumping out to Schweser to get the big picture, then come back to CFAI to examine the blue boxes and EOCs.

Make sure you know how to compute economic pension expense both ways, and how GAAP/IFRS differ.

#5

Pension accounting is like a direct shot of poison to the heart.

#6

The best way to learn this is to understand how GAAP works and then understand what changes are done for IFRS. This is explained in most “sh…ty” in CFAI book and even Schweser didnt do a good deal about it IMHO. I had gone for classes to a place here and the prof was just too good and gave us a presentation which was perfect for me… Even economic pension expense is explained in the most horrible way, but actually its a nice topic (ok atleast for me :)).

Try to separate out GAAP and then understand the delta for IFRS.

Economic pension expense can be calculated in two ways and understand that. These are straight forward points as they can ask what is the difference between Net Pension Asset/Liability under GAAP and IFRS, which you definitely dont want to miss.

Good luck!

#7

I think irfanullah has done a good job at explaining them too. Went through his and Schweser’s videos yesterday and found that irfanullah has explained it really well, unlike Schweser.

I’ve only done Projected Benifit Obligation (PBO or PVDBO as they call it in IFRS) still got a long way to go here.

#8

Pensions has changed from last year hasn’t it?

#9

Jehanzaib Zafar. Are you studying from the 2012 materials?

#10

yup … it has changed but not that much and i’m aware of those changes. I’ve 2013 videos of Irfanullah

#11

Irfanullah seems to be quite popular with Indian/Pakistani candidates on this forum

#12

The reading on pension accounting in 2010 and 2011 was a nightmare. In 2012 it was a little better but still in the nightmare category. The 2013 version has improved considerably, even thought the authors and most of the learning objectives are the same. There are two reasons for this improvement:

  1. US GAAP and IFRS convergence. (Now the balance sheet reporting is effectively the same under both standards).

  2. The authors have made a concerted effort to explain concepts through simpler and more intuitive examples (perhaps they have been listening to my lectures:-)

So my radical advice is that you read the curriculum. If you still have trouble understanding the material then write to my assistant (admin@arifirfanullah.com), reference this post and provide a gmail id. He’ll give you access to my lectures on pension accounting.

Good luck with your studies…

#13

Pensions is a walk in the park…a piece of cake if you ask me…

if that park was infested with zombies and that cake soaked with poison