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15 Cards in this Set
- Front
- Back
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an arrangement whereby an employer provides benefits (payments) to retired employees for services they provided in their working years
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Pension Plan
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In this, the employer agrees to contribute to a pension trust a certain sum each period, based on a formula
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Defined-contribution plan
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Make predictions of mortality rates, employee turnover, interest and earnings rates, early retirement frequency, future salaries, and any other factors necessary to operate a pension plan
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Actuaries
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The deferred compensation obligation it has to its employees for their service under the terms of the pension plan
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Pension obligation
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The present value of vested and nonvested benefits accrued to date, based on employees' future salary levels
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Projected Benefit Obligation
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The amount payable adjusted to reflect the time value of money and the probability of payment between the present date and the expected date of payment
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Actuarial Present Value
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The expense caused by the increase in pension benefits payable (the PBO) to employees because of their services redered during the current year.
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Service Cost
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Accrues each year on the projected benefit obligation just as it does on any discounted debt
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Interest Expense
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Allocates the cost (PSC) of providing these retroactive benefits to pension expense in the future, specifically to the remaining service years of the affected employees
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Amortization of Prior Service Cost
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The increase in pension funds from interest, dividends, and realized and unrealized changes in the fair-market value of the plan assets
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Actual Return on the Plan Assets
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Sets a limit of 10% of the larger of the beginning balances of the PBO or the market-related value of the plan assets. Above that amount the Accumulated OCI account is considered too large and must be amortized
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Corridor Amortization Approach
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A deferred compenation arrangement whereby an employer promises to exchange future benefits for employees current services. Include health care benefits, educational benefits, advisory services, etc.
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Post-retirement Benefit Plan
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A plan in which the employers contribution is determined based on a specified formula, and any future benefits are earned on the investment of those contributions
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Defined Contribution Plan
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A plan that states the benefits to be received by the employees after retirement or the method of determining such benefits
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Defined Benefit Plan
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A plan in which the company makes periodic payments to a funding agency that assumes the responsibilty for safeguarding and investing the pension assets to earn a return on the investments for the pension plan, and for making payments to the recipients of benefits
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Funded Plan
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