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laurab

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tT
发表于 2011-7-13 14:24 | 只看该作者

Economic Pension Expense Hint

decided, economic, remember, different
I couldn't remember the economic pension expense formula to save my life. Somehow, looking at different EOCs, etc. I was able to derive a much simpler formula:

Economic Pension Expense = Contributions - (Change in Plan Assets - Change in PBO) = Contributions - Excess Contributions

So far it has worked wonders. Hadn't seen it in my reviews so decided to share. Hope it helps.

 

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redskins44

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2#
发表于 2011-7-13 14:24 | 只看该作者
Yep, believe the way it is outlined in Schweser is:

Change in funded status - Firm Contributions = Economic Pension Expense

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stalkey

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3#
发表于 2011-7-13 14:24 | 只看该作者
economic pension expense = change in funded status - contribution

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mp3bu

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4#
发表于 2011-7-13 14:24 | 只看该作者
know the full length way too... you never know what presentation CFAI is going to hit you with

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DSquaredSlim

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5#
发表于 2011-7-13 14:24 | 只看该作者
Is the full-length way essentially PBO (don't include benefits paid) minus actual return on assets?



Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 11:29PM by daveyc18.

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comp_sci_kid

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6#
发表于 2011-7-13 14:24 | 只看该作者
Essentially, yes. Pick off all the costs that hit the PBO and subtract the actual return in plan assets. Note, sometimes CFAI is sneaky and the actual return is negative.

daveyc18 Wrote:
-------------------------------------------------------
> Is the full-length way essentially PBO (don't
> include benefits paid) minus actual return on
> assets?

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CPATrader

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7#
发表于 2011-7-13 14:24 | 只看该作者
daveyc18 Wrote:
-------------------------------------------------------
> Is the full-length way essentially PBO (don't
> include benefits paid) minus actual return on
> assets?

Yes. That's the other way to do it.

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madaochenggong

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8#
发表于 2011-7-13 14:24 | 只看该作者
One thing that's confusing me is that in Schweser's notes amortization of actuarial loss is under "pension expense," but it's omitted in PBO, where it should be included, too, right?

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Otabek

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9#
发表于 2011-7-13 14:24 | 只看该作者
Yes, Actuarial g/l are part of PBO.

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giorgio10

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10#
发表于 2011-7-13 14:25 | 只看该作者
Actuarial Gains and Losses and Plan Amendments are always included in PBO, in their total amount.

However, they are not recognized in the I/S immediately. Instead, they go directly into OCI.

Deferred Gains/Losses in OCI = Actuarial Gains/Losses + Difference between Expected Return and Actual Return on Assets

When the accumulated value of Deferred Gains/Losses in OCI exceeds the 'corridor' (=10%*max(PBO, PA)), you must amortize the excess over the corridor, over the remaining life of the plan. This amortization amount shows up as your "amortization of deferred gains/losses" in pension expense.

Plan Amendments also go into OCI, and this shows up as "amortization of prior service costs" in your pension expense calculation.

Note: under IFRS, any prior service costs that have been vested go directly into the I/S.

So remember: PBO is your OBLIGATION - it has to include the total impact of any plan amendments or changes in actuarial assumptions. But Pension expense is your PERIODIC expense - so that is why you only include amortization of these amounts (in an attempt to "smooth" pension expense and reduce volatility).

Also, under GAAP, the net pension A/L on the B/S is simply the funded status (PA - PBO). Under IFRS, the net pension A/L on the B/S is the funded status +/- adjustments for any UNrecognized costs in OCI.

Hope that helps!

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