Total Periodic Pension Cost

CFA Level II FRA
#1

I know this have been heavily discussed on this forum but I still am struggling and seem to find contradicting solutions when it comes to finding Total Periodic Pension Costs.

Can someone please explain to me when do we know which formula to use:

  1. TPPC = Contributions - (Ending funded status - Beginning funded status) (When Net Pension Liability)

  2. TPPC = -Actual Returns on PA + Service Costs (Current/Past) + Interest Costs + Acturial Losses/ (Gains)

thanks.

#2

You use whichever formula you can, based on the information they give you.

They won’t give you enough information that you can use either; they’ll either omit something for the first formula or they’ll omit something for the second formula.

#3

Thank you- I didn’t realize that the solution was that easy.

#4

You’re welcome.