L1 Pension Plans

Question 1

Pension Plan

Answer 1

retirement plan where employer contributes to fund used to pay for employee retirement benefit. Lump sum and annuity benefits

Question 2

Pension plan - when are contributions made by company and how does it grow

Answer 2

contributions made into fund during employees tenure at a company. Grows with deposit of accumulation of interest for retirement income

Question 3

Defined Contribution Pension Plan

Answer 3

specify amount, percentage of salary employer and employee will contribute into pension fund. Proceed available as lump sum when they retire

Question 4

Defined Benefit Pension Plan

Answer 4

specify amount of annual pension employee will receive with guarantees and benefits offered by the company.

Question 5

How is Defined Benefit Pension Plan Calculated

Answer 5

nsa
(number of year in service)(accrual rate)(pensionable salary)

Question 6

Pensionable Salary Depends on Plan Type: 3 plans are

Answer 6

Final Salary Pension Plan
Career Average Earnings Pension Plan
Career Average Revalued Earnings Pension Plan

Question 7

Final Salary Pension Plan - S calculation

Answer 7

S = average salary over last few years of employment

Question 8

Career Average Earnings Pension Plan - S calculation

Answer 8

S = average of employees salary throughout their career at the company

Question 9

Career Average Revalued Earnings Plan - S calculation

Answer 9

S = average of employee salary throughout their career but all salaries adjust for inflation

Question 10

Defined Benefit Plans and withdraw benefit

Answer 10

for employee who leaves company before they retire. May also offer death service benefits for employee who dies during their employment