Notes 9

Notes 9 - Actuarial estimate of future pension benefits o...

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Pensions Pensions: o Related to B/S, assets or liabilities o Company gives postretirement benefits to employees o Defined benefit: Employer bears risk of pension fund performance o Defined contribution: Employee bears risk Becoming more common than defined benefit “If you put 5% of income into 401K every year, the company will match it” Employee chooses where to invest money o Company must make sure there is enough $ in the pension fund to cover all worked employee years up to now o Projected Benefit Obligation (PBO)
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Unformatted text preview: Actuarial estimate of future pension benefits o Funded status: Difference between value of plan assets (what is in the pension fund) and PBO (what is owed) Overfunded when value of plan assets is greater than PBO Underfunded when… o FASB 158: Overfunded: • Net Pension Asset appears on B/S under Assets Underfunded: • Net Pension Liabilities appears on B/S under Liabilities o Ex. Xerox note: Shows “benefit obligation” (PBO), impact on B/S...
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This note was uploaded on 06/10/2011 for the course BUSI 407 taught by Professor Bowen during the Spring '11 term at UNC.

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Notes 9 - Actuarial estimate of future pension benefits o...

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