The projected benefit obligation was $80 million at the beginning of the year. Service cost for the year was $10 million. At the end of the year, pension benefits paid by the trustee were $6 million and there were no pension-related other comprehensive income (OCI) accounts requiring amortization. The actuary’s discount rate was 5%. The actual return on plan assets was $5 million although it was expected to be only $4 million. What was the total pension expense for the year?

The projected benefit obligation (PBO) is a measurement of the present amount of money needed by a company to cover future pension liabilities. PBO uses how long the employee will work and any increased future obligations to the employee's pension.

Given that:

PBO at the beginning of the year = $80 million

Service cost for the year = $10 million

Interest = Discount rate × PBO at beginning of the year = 5% × $80 million = 0.05 × $80 million = $4 million

Actuarial (gain) Loss = Amount paid - Expected money = $5 million - $4 million = $1 million

Benefits paid paid by trustees = $6 million

The total pension expense for the year = PBO at year beginning + Service cost + interest - Actuarial (gain) Loss - benefits = $80 million + $10 million + $4 million - $1 million - $6 million = $87 million

tallinn tallinn · Answer 2 · 2022-04-05T15:25:16+02:00

When The total pension expense for the year is = PBO at year $87 million and Increased future obligations to the employee's pension.

What is Pension expense?

When The projected benefit obligation (PBO) is a measurement of the present amount of money needed by a company to cover future pension liabilities. Also, PBO uses how long the employee will work and any increased future obligations to the employee's pension.

Given that:

Also, PBO at the beginning of the year is = $80 million

Then, Service cost for the year = $10 million

Interest = Discount rate × PBO at beginning of the year = 5% × $80 million = 0.05 × $80 million = $4 million

After that, Actuarial (gain) Loss = Amount paid - Expected money = $5 million - $4 million = $1 million

Then, The Benefits paid paid by trustees = $6 million

Therefore, The total pension expense for the year = PBO at year Then beginning + Service cost + interest - Actuarial (gain) Loss - benefits = $80

Hence, million + $10 million + $4 million - $1 million - $6 million = $87 million

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