Pension Plan Versus Benefit Analysis

SFAS No. 87 “Employers’ Accounting for Pensions” maintains that pension information should be prepared on the accrual basis and retained three fundamental aspects of past pension accounting: 1. delaying recognition of certain events, 2. Reporting net cost, and 3. offsetting assets and liabilities” (Schroeder, Clark, & Cathey, "Pensions and Other Postretirement Benefits," 2011). “The components of pension costs reflect different aspects of the benefits earned by employees and the method of financing those benefits by the employer. The following are required to be included in the net pension cost recognized by the employer sponsoring a defined benefits pension plan: 1. Service cost, 2. Interest cost, 3. Return on plan assets, 4. Amortization of unrecognized prior service cost, 5. Amortization of gains and losses, 6. Amortization of the unrecognized net obligation or unrecognized net asset at the date of the initial application of SFAS No. 87” (Schroeder, Clark, & Cathey, "Pensions and Other Postretirement Benefits," 2011).

increase when the company or the employees make additional cash contributions. Pension benefits are paid out when employees retire and this reduces the plan‟s assets. d. Pension expense is determined using the expected return on plan assets (not the actual return). The expected return on the assets reduces the expense. The pension plan assets are measured on the balance sheet each period at

For pensions and post-retirement accounting methods to recognize the benefit costs, estimates and assumptions on future events ascertaining the timing and amount of benefits payments must be sought first. This paper seeks to compare and contrast the early historical accounting for pensions and post-retirement healthcare and life insurance benefits with the rules and guidance applied today in addition to the changes to such guidance and rules that would improve the accounting and reporting of such benefits depending on the business and political changes and as such, predict the effect of such changes on financial reporting and accounting practices.

Created for the purpose of assisting those of 65 and older, OAS is a pension program that has come a long way compared to when it first started out in 1906. Despite still having some flaws within the program, it has provided some income assistance for those who need it. The program itself has also improved over the years to include things such as: lowering the eligible age and the inclusion of spouse/common-law partner sharings. Overall, OAS has become something much more than a mere idea that was discussed during the day, and marked the starting of change within Canadian society.

Accordingly, the $39.3 million actuarial gain which resulted from the restructuring is included in Accrued Pension Costs in the accompanying Balance Sheet and is being amortized to income over a ten-year period commencing in 1984. The effect of the changes in the investment return assumption rates for all U.S. plans, together with the 1984 restructuring of the U.S. Salaried Employees' Plan, was to reduce pension expense by approximately $4.0 million in 1984 and $2.0 million in 1983, and the actuarial present value of accumulated plan benefits by approximately $60.0 million in 1984. Pension expense in 1983 was also reduced $2.1 million from the lower level of active employees. Other actuarial gains, including higher than anticipated investment results, more than offset the additional pension costs resulting from plan changes and interest charges on balance sheet accruals in 1984 and 1983.

Which type of pension plan would you prefer to be covered under (i.e., defined benefit, defined contribution, or cash balance) and why if you were an employee? An employer?

Our company has acquired a new manufacturing company. The new company has certain components, which are different from the new parent company. First, it has two different pension plans, which our company will have to research and to learn how to report on our financial statement. Also they have two different segments, which our objective is to eliminate. Our first goal is to define the pension plans and other retirement benefit plans and how we are to report them on our financial statements. Our second goal is to define the steps to eliminate the two segments within the guidelines of the Federal Accounting Standard Boards and the

As a baseline to understanding an IPP, it is critical to establish some of the core elements of the registered pension plan (RPP) regime. AN IPP is essentially a defined benefit pension plan (DB) setup by an employer with a limited number of designated beneficiaries (e.g. directors and officers) or possibly, a single beneficiary (owner-manager). It requires registration with Canada Revenue Agency (CRA) with ongoing maintenance and compliance in accordance with the Act. Failure to comply with rules set forth in the ITA could result in revocation or deregistration, which consequently could lead to unfavorable tax consequences. The plan must be sponsored and funded by a corporation with funding possibly also coming from employees. In general, DB plans offer employees specific future pension benefits upon retirement, typically calculated on the basis of a percentage of their employment income over their service period. IPP subscribers have additional confidence in knowing that their post-employment benefits will be fixed in value each year – which eliminates the uncertainty and concerns raised with retirement investments premised on the performance of capital markets. Pension plans are in the purview of either provincial or federal legislation; however, the scope of this discussion is confined to the Act.

This pension system contained a number of disadvantages at the beginning. First, the applicant should be aged 70 or older who lived in Canada for at least two decades and in their current province of residence for five years with a maximum $20 a month (reference …). Twenty dollar in 1927 is about $270 today. Also, in order to determine eligibility, the system used a “mean test”. This meant the provincial government would evaluate seniors’ eligibility based on the criteria such as income, property ownership, and the level of support from relatives (reference ).

Our company has been providing their employees with a pension plan for many years. However, these benefits plans have to be reviewed and possibly revised after the recent acquisition of XYZ Company. Through the use of a funding agency, payments are invested so that periodic payments can be made to the employee during retirement. Defined contribution and defined benefit are the two most common types of pension plans.

The suggestion to become an actuary came to me first from a professor in my first year of undergraduate studies. Based on my class performances, he felt that I have talents and gifts for the actuary profession. After doing some research and talking to professional people around me, I started to have a clear picture of what an actuary is. Some people define actuaries as “people who know how to calculate money-related risks”, and others define it as “people who can provide necessary money-market analytic tools to help diversify risks and ensure financial stabilities”. In addition, I see an actuary as someone who understands risk, respects risk and can seek for hidden opportunities from risk.

Jennie’s Uncle Jack has what they call a defined benefit pension plan which is a retirement program promised a pension based on age and years of service (Mathis, Jackson, Valentine, & Meglich, 2017, p. 502). Defined benefit pension plan advantage is that Uncle Jack didn’t have to contribute anything just show up for work. Also, the plan allows for the spouse to be a beneficiary of the funds should the employee take a payment that is less. Therefore,

Pension obligations face several critical factors in computations of estimates; interest rates, vesting requirements, life expectancies, work-force projections, and company reorganizations. As TecQuirk administers a defined pension plan, estimates must be calculated for future pension payments, which are dependent upon contributions and the effectiveness of reserves management (Volkov,

EconomicThis document has been made available on www.actuaries.org.uk with the permission of the Society of Actuaries, Schaumburg, Illinois. Copyright 2008.

Journal of International Business and Cultural Studies Bullen (1989), Flamholtz, Bullen & Hua (2002), and Flamholtz,Kannan-Narasimhan & Bullen (2004. Human Resource Accounting and International Financial Reporting Standards In recent years United States GAAP has been moving toward adoption of more complex measurement methods in financial reporting compared with the traditional historical cost approach to asset measurement, including a focus on the measurement of the time value of money and present value calculations. Meeting, Luecke & Garceau (2001, p. 57) indicate that in many cases the expected cash flow approach is a better measurement tool than traditional methods, and that CPAs should use it to report asset and liability values in the absence of specific contractual