Anyone have an easy way to remember these pension formulas?!
I tried my butt of but I can’t come up with anything. I’m just trying to understand how it works and I’m going from there!
Haha if you could come up with something please let me know. Memorization is about all that I came up with it. There are only so many ways they can ask pension questions, so knowing the sensitivitys to changes in the assumptions could help deduct one of the wrong answers. Economic pension is includes dedcutions “Actual” events. That’s all the advice I can give you.
PBO: Bears (Beg PBO) Always (amendments) Imagine (interest) Stealing (service cost) All (actuarial g/l) Bees (benefits paid) End product, aka honey (end PBO)
Aww how cute! I’ll remember that thanks!
Why are we even learning this? This is something for CPAs. I said screw it early on. Nobody ever said that company A was a strong buy because their PBO was awesome. There’s a hundred other things we should be learning. If they seriously make this 5% on the actual exam and not just 1 question, I’m going to stand up and punch someone right there.
You guys have best the best source of entertainment This week!
*been. Damn iPad autocorrect
FV of plan assets: But (Beg FV) Every (employee contributions) Average (Actual Ret) Bear (benefits paid) Eats berries instead (end FV)
I made up my own. For Pension Expense: “Sharp Edge Invites An Accident” Service Cost + Expected Return + Interest Cost + Amortization of Actuarial Loss + Amortization of Prior Service Costs I have the two A’s at the end so I can remember this is the formula with both amortized factors in the equation. For PBO Reconciliation: “Bad Swearing Is An Awful…Bastard!” Beginning PBO + Service Cost + Interest + Amendments to Plan +(-) Actuarial (gains) losses - Benefits Paid = Ending PBO For Plan Assets Recon : “Brave Attempt Cuts…Boredom” Beginning Fair Value + Actual Return + Contributions - Benefits Paid = Ending Fair Value I deliberately put the negative values at the end after the dotted section for ease of memory.
Mine (and don’t laugh) PBO Sales(service cost) In(Interest cost) America(actuarial gains/Losses) is Profitable(Prior Service costs) Business(Benefits) Assets And (Actual Returns) Entrepreneurs (employer contributions) Benefit (Benefits Paid)
Going with the theme that FRA is intent on f****ing me. Net Pension Asset Liability = Fu*k +/- U Fu (Funded Status) U (+/- all the unrecognized items)