Indicate by letter whether each of the events listed below increases (). decreas
ID: 2400175 • Letter: I
Question
Indicate by letter whether each of the events listed below increases (). decreases (D), or has no effect (N) on an employer's projected benefit obligation. Events 1. Interest cost 2 Amortization of prior service cost 3. A decrease in the average life expectancy of employees 4. An increase in the average life expectancy of employees 5. A plan amendment that increases benefits is made retroactive to prior years 6. An increase in the actuary's assumed discount rate Cash contributions to the pension fund by the employer 8. Benefits are paid to retired employees 9 Service cost 0 Return on plan assets during the year are lower than expected 11 Return on plan assets during the year are higher than expected 7Explanation / Answer
1. Interest cost. - I
2. Amortization of prior service cost. - N
3. A decrease in the average life expectancy of employees. - D
4. An increase in the average life expectancy of employees. - I
5. A plan amendment that increases benefits is made retroactive to prior years. - I
6. An increase in the actuary’s assumed discount rate. - D
7. Cash contributions to the pension fund by the employer. - N
8. Benefits are paid to retired employees. - D
9. Service cost. - I
10. Return on plan assets during the year are lower than expected. - N
11. Return on plan assets during the year are higher than expected. - N