AN ACTUARIAL BALANCE SHEET MODEL FOR DEFINED BENEFIT PAY-AS-YOU-GO PENSION SYSTEMS WITH DISABILITY AND RETIREMENT CONTINGENCIES

2014 ◽  
Vol 44 (2) ◽  
pp. 367-415 ◽  
Author(s):  
Manuel Ventura-Marco ◽  
Carlos Vidal-Meliá
Keyword(s):  
Social Security ◽  
Theoretical Basis ◽  
Balance Sheet ◽  
Pension Plan ◽  
Defined Benefit ◽  
Partial Support ◽  
Disability Benefits ◽  
Pension Systems ◽  
Duration Measure

AbstractIn this paper, we develop a theoretical basis for drawing up a “Swedish” type actuarial balance sheet for a defined benefit pay-as-you-go (DB PAYG) scheme with retirement and disability benefits. Our model enables us to obtain the system's expected average turnover duration, measure the scheme's solvency and explore the phenomenon identified as “pension reclassification”, a widespread practice that masks the system's real status unless further pension information becomes available. The model is clearly linked to actuarial practice in social security and gives partial support to the practical adaptation of Swedish methodology carried out by OSFI (2012) in applying the concept of the contribution asset to the Canadian Pension Plan (CPP) balance sheet, which includes disability and survivor benefits.

Opinions Of Financial Analysts On Accounting For defined Benefit Pension Plans

2011 ◽  
Vol 11 (3) ◽  
pp. 65 ◽  
Author(s):  
Kenneth E. Stone ◽  
David W. Joy ◽  
Cynthia J. Thomas
Keyword(s):  
Balance Sheet ◽  
Financial Analysts ◽  
Pension Plan ◽  
Fair Value ◽  
Pension Plans ◽  
Defined Benefit ◽  
Service Cost ◽  
Prior Service ◽  
Gains And Losses ◽  
Defined Benefit Pension Plans

Responding financial analysts preferred pension plan accounting which contrasts with requirements of SFAS No. 87. The preferred model included: (1) Plan assets and accumulated benefit obligations are on the balance sheet. (2) Prior service cost is recognized in the year of plan adoption or amendment. (3) Gains and losses are recognized when they occur. (4) Annual pension expense is computer by netting the change in fair value of plan assets, deposits to the pension plan, and the change in accumulated benefit obligations.

scholarly journals Teaching The Interrelationships Among Costs, Expense, And Liability Of A Defined Benefit Pension Plan

2008 ◽  
Vol 5 (2) ◽  
Author(s):  
Arlette C. Wilson ◽  
Norman H. Godwin
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Pension Plan ◽  
Financial Accounting ◽  
Defined Benefit ◽  
Financial Accounting Standards Board ◽  
Operating Income ◽  
Defined Benefit Pension Plan ◽  
Other Comprehensive Income ◽  
Representational Faithfulness

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” (SFAS #158).  Their intent is to comprehensively reconsider the accounting for postretirement benefit plans in phases.  The first phase was to provide timely and significant improvements and resulted in SFAS #158.  The object of this Statement is to improve the understandability and representational faithfulness of the amounts reported in the employer’s statement of financial position by recognizing as an asset or liability the overfunded or underfunded status of a defined benefit postretirement plan.  The purpose of this paper is to provide a logical approach for teaching accounting for a defined benefit pension plan.  This objective will be accomplished by providing a discussion with detailed illustrations of the interrelationships of the effects on income (both operating income and other comprehensive income) and the amount reported on the balance sheet.

For teachers, a better kind of pension plan

2017 ◽  
Vol 99 (2) ◽  
pp. 32-36
Author(s):  
Marcus A. Winters
Keyword(s):  
Public School ◽  
School Teacher ◽  
Pension Plan ◽  
Defined Benefit ◽  
Public School Teachers ◽  
Neutral Solution ◽  
School Teachers ◽  
Pension Systems ◽  
Defined Benefit Plans ◽  
Retirement Wealth

Public school teachers deserve a compensation system that puts them on a secure path toward retirement. The severely backloaded structure of today’s public school teacher pension systems benefit only a small proportion of entering teachers while putting the rest on an insecure retirement path. But there is a cost-neutral solution to this problem that would benefit most teachers entering public school classrooms today without removing any of the protections from the stock market with which teachers have become accustomed. Teacher pensions could be restructured so that teachers earn retirement wealth in relatively equal intervals throughout their careers. The author calls these Smooth Accrual Defined Benefit plans.

Social Security and Defined Benefit Pension Payout Choices: Evidence from a Survey of Retirees

2015 ◽  
Author(s):  
Steve Nyce ◽  
Sylvester J. Schieber ◽  
John B. Shoven ◽  
Sita Slavov ◽  
David A. Wise
Keyword(s):  
Social Security ◽  
Defined Benefit

Getting More from Less in Defined Benefit Plans

2018 ◽  
Author(s):  
Daniel W. Wallick ◽  
Daniel B. Berkowitz ◽  
Andrew S. Clarke ◽  
Kevin J. DiCiurcio ◽  
Kimberly A. Stockton
Keyword(s):  
Interest Rates ◽  
Pension Plan ◽  
Defined Benefit ◽  
Portfolio Risk ◽  
Defined Benefit Pension Plan ◽  
Increased Risk ◽  
Investment Returns ◽  
Defined Benefit Plans ◽  
Asset Class ◽  
Reduced Costs

As global interest rates hover near historic lows, defined benefit pension plan sponsors must grapple with the prospect of lower investment returns. We examine three levers that can enhance portfolio outcomes in a low-return world: increased contributions; reduced investment costs; and increased portfolio risk. We use portfolio simulations based on a stochastic asset class forecasting model to evaluate each lever according to two criteria: the magnitude of impact and the certainty that this impact will be realized. We show that increased contributions have the greatest and most certain impact. Reduced costs have a more modest, but equally certain impact. Increased risk can deliver a significant impact, but with the least certainty.

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