Pension Plans Research Paper

A pension is a regular payment made during a person's retirement from an investment fund from which that person

As you may know there are two types of pension plans that are most commonly used: a defined contribution plan and a defined benefit plan. “A defined contribution plan sets forth a certain amount that the employer is to contribute to the plan each period (Schroeder, Clark, & Cathey, "Pensions and Other Postretirement Benefits," 2011). “A defined benefit plan specifies the amount of pension benefits to be paid out to plan recipients in the future. Companies that use this plan must make sufficient contributions to the funding agency in order to meet benefit requirements

a. i. An employer with a defined-contribution plan pays into the plan either an annual lump-sum per employee or calculates payments based on the employees‟ current wages and or time of service with the firm. Under such a plan, the employer does not guarantee the future amounts employees will receive when they retire. The employees covered by a defined-contribution plan assume the risk for the pension plan‟s financial performance. Under a defined-benefit plan, the employer specifies the size and timing of the payments that the employees will receive when they retire. Typically, these retirement benefits are commensurate with the wages earned by the employee in his or her last few years of employment

Traditional pension plans were once the gold standard of employer-sponsored retirement plans before IRAs and 401(k)s became more prevalent. If you have such a plan at work, your life expectancy and benefits were calculated to set your payroll and employer contributions. Once fully vested, the pensions are guaranteed to employees or their heirs. There are also special annuity plans called 412(i) or 412(e)3 plans that are funded through insurance. Features of these retirement plans include:

Generally accepted accounting principles (GAAP) allow companies wide latitude in the choice of accounting policies. After a firm chooses a set of accounting policies, current accounting rules permit changes from one alternative policy to another at the discretion of the management. Since reported accounting figures are widely used by a number of external parties, managers of firms have incentives to choose accounting policies in order to influence the behavior of these parties. A variety of managerial motives for

There are over a million residents living in Rhode Island between the ages of 21 to 65. The majority of the Rhode Island population is not employed by the state nor does an individual concern oneself with state issues (Randazzo, 2013). The Employee Retirement System of Rhode Island (ERSRI) was originated to cover state employees and teacher’s retirement, disability, survivor, and death benefits (Randazzo, 2013). In 1987 and 1989, the State Police Retirement Benefits Trust and the Judicial Retirement Benefits Trust were established (Randazzo, 2013). All pension plans in Rhode Island are managed by the state and the funds are commingled for investment purposes in determining the actuarial value

The employers offering pension plans were to disclosure the plans as well as the general features that were contained in the document in addition to the current year and pension expense incurred. This would equal the postretirement health care and life insurance benefits. As such, the components of the pension expense, net funding status, pension asset and obligation accounts, and pension expense components needed disclosure. Since then the net pension liability or asset have to be booked while the changes in pensions liabilities and assets not included into the income being added into other comprehensive income. According to the SFAS No.87 Employers ' Accounting for Pensions, disclosure of the pension

GAASB is proposing some major improvements to the reporting of pension plans. (GASB Proposes Major Improvements for Pension Reporting, 2011). Immediate recognition of more components of pension expense will be required, including the effect on the pension liability of changes in benefit terms, rather than deferred and amortization over as many as 30 years. Use of a discount rate will be required that applies the expected long term rate of return on pension plan investments where pension assets are expected to be available to make projected benefit payments and the interest rate on a tax exempt 30 year AA or higher rated municipal bond index to projected benefit payments where plan assets are not expected to be available for long term investment in a qualified trust. A single actuarial cost allocation method, the entry age normal, will be required. Governments participating in cost sharing multiple employer plans will be required to record a liability equal to their proportionate share of any net pension liability for the cost sharing plan as a whole. Governments in all types of covered pension plans will be required to present more extensive note disclosures and required supplementary information.

This paper will be based research, compare and contrast the early historical accounting for Postretirement Health Care and Life Insurance Benefits with the guidance / rules in place today with the Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 158 "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans; changes to the guidance and rules that would improve the financial accounting and reporting of the benefits. Predict the significant manner in which the future of accounting for these benefits could

Employers assume responsibility for providing retirement funds in a defined benefits plan. In the plan, a specified amount is set aside for future payments to employees, for life, during retirement. The amount is determine in advance is based on factors such as age, salary, and length of employment. In 2009, the maximum amount to be allotted under the plan was $195,000.

GAAP (Generally Accepted Accounting Principles) determine the content and format of financial statements. SEC (Securities and Exchange Commission) requires publicly traded companies to issue annual audit. Concerns are about adequacy of disclosure; and behavioral implications are secondary.

1. In a defined-contribution (DC) pension plan, the employee or employer, or both, make regular contributions to the plan. In the US, employees typically set aside a predetermined percentage of their earnings which is deposited to the plan and the employer will match that contribution. Ultimately, the amount of money available to the individual upon retirement is determined by the performance of their investments. Each employee retains the option to choose how to diversify their investments, while the employer will typically provide a “default allocation” option. The options available are generally very varied, and includes a number of index funds and actively managed mutual funds.

Pension funds are any plans, funds or schemes which provide retirement income. These funds are important to shareholders of listed and private companies and they are particularly important to the stock market which is dominated by large institutional investors. This essay discusses the idea of pension funds and the pension crises. It defines the issues of pension funds, talks about the various pensions, categorizes them, and discusses the pension crisis and its implications to the US in particular and to the world in general.

Creating an estate plan remains one task every individual should complete, regardless of how much or how little they have in terms of assets. The plan serves to distribute these assets according to the wishes of the deceased and to ensure items arrive in the right hands. Many couples prepare this plan together, yet fail to make changes in the event they divorce. In addition, individuals need to understand what happens in the event they pass away before the divorce is finalized. It's best to speak to a Divorce Lawyer in Barrington to fully understand your situation, your current estate plan and where changes need to be made,but following is a general overview of certain topics that may be of interest.

GAAP is exceptionally useful because it attempts to regulate and normalize accounting definitions, assumptions, and methods. Because of generally accepted accounting principles one is able to presuppose that there is uniformity from year to year in the methods that are used to prepare a