Podcast
Questions and Answers
What is the main difference between funding and advance funding in the context of DB pension plans?
What is the main difference between funding and advance funding in the context of DB pension plans?
- Funding involves creating a fund held by a third party, while advance funding requires contributions to be made before benefits are paid. (correct)
- Funding allows for contributions to be made after benefits are paid, while advance funding does not.
- Advance funding involves creating a fund held by a third party, while funding requires contributions to be made before benefits are paid.
- Funding requires contributions to be made before benefits are paid, while advance funding involves paying out benefits as they are needed.
Why is 'Pay-as-you-go' approach not commonly used for private DB pension plans?
Why is 'Pay-as-you-go' approach not commonly used for private DB pension plans?
- It offers significant tax benefits under the Income Tax Act.
- It provides orderly cash management for employers.
- It ensures employees receive promised benefits regardless of the sponsor's financial status.
- It is prohibited by pension standards legislation. (correct)
What is the primary reason for advance funding a DB pension plan according to the text?
What is the primary reason for advance funding a DB pension plan according to the text?
- To ensure employees receive promised benefits regardless of the sponsor's financial status.
- To benefit from significant tax advantages under the Income Tax Act.
- To comply with legal requirements mandated by PSL and Federal legislation. (correct)
- To allow contributions to be made after benefits are paid.
What role does cash flow management play in the context of advance funding a DB pension plan?
What role does cash flow management play in the context of advance funding a DB pension plan?
What does GAAP necessitate regarding pension costs in financial statements?
What does GAAP necessitate regarding pension costs in financial statements?
Why are tax advantages listed as a reason for advance funding a DB pension plan?
Why are tax advantages listed as a reason for advance funding a DB pension plan?
What is the main purpose of actuarial assumptions in a pension plan according to the text?
What is the main purpose of actuarial assumptions in a pension plan according to the text?
In the scenario provided, what is the expected outcome of changing the plan design to include a bridge benefit before the age of 65?
In the scenario provided, what is the expected outcome of changing the plan design to include a bridge benefit before the age of 65?
Which advice given by actuaries falls under Part 3000 of the CIA Standards of Practice in relation to pension plans?
Which advice given by actuaries falls under Part 3000 of the CIA Standards of Practice in relation to pension plans?
Which type of pension plans are exceptions to the application of CIA Standards of Practice?
Which type of pension plans are exceptions to the application of CIA Standards of Practice?
What is a key feature of an External User Report according to Part 3000 of CIA Standards of Practice?
What is a key feature of an External User Report according to Part 3000 of CIA Standards of Practice?
What does a Going Concern Valuation Report focus on according to CIA Standards of Practice?
What does a Going Concern Valuation Report focus on according to CIA Standards of Practice?
What sets a Solvency Valuation Report apart from a Hypothetical Wind Up Valuation Report?
What sets a Solvency Valuation Report apart from a Hypothetical Wind Up Valuation Report?
What must be included in each actuarial valuation report for a pension plan according to CIA Standards of Practice?
What must be included in each actuarial valuation report for a pension plan according to CIA Standards of Practice?
'External User Reports' are prepared by actuaries for whom according to CIA Standards of Practice?
'External User Reports' are prepared by actuaries for whom according to CIA Standards of Practice?
What is the role of actuarial assumptions in determining sponsor contributions for a pension plan, according to the text?
What is the role of actuarial assumptions in determining sponsor contributions for a pension plan, according to the text?
What is the main difference between forecast funding methods and traditional methods in assessing funding levels for pension plans?
What is the main difference between forecast funding methods and traditional methods in assessing funding levels for pension plans?
How does an increase in the interest rate affect the current service cost of a defined benefit pension plan?
How does an increase in the interest rate affect the current service cost of a defined benefit pension plan?
Which economic assumption for DB pension plan funding relates to the expected growth in employees' paychecks each year?
Which economic assumption for DB pension plan funding relates to the expected growth in employees' paychecks each year?
How do actuarial assumptions relate to the ultimate cost of a pension plan?
How do actuarial assumptions relate to the ultimate cost of a pension plan?
Which factor increases the current service cost of a defined benefit pension plan?
Which factor increases the current service cost of a defined benefit pension plan?
What assumption influences how long employees work and impacts their pension benefits?
What assumption influences how long employees work and impacts their pension benefits?
How does an increase in the CPI affect the current service cost of a defined benefit pension plan?
How does an increase in the CPI affect the current service cost of a defined benefit pension plan?
What is considered when determining benefit entitlement and benefit continuance assumptions for DB pension plans?
What is considered when determining benefit entitlement and benefit continuance assumptions for DB pension plans?
What is the main purpose of calculating commuted values for DB pension benefits?
What is the main purpose of calculating commuted values for DB pension benefits?
According to CIA Standards of Practice, what is covered in calculations for commuted values?
According to CIA Standards of Practice, what is covered in calculations for commuted values?
What is the purpose of IAS 19 in relation to accounting for pension costs?
What is the purpose of IAS 19 in relation to accounting for pension costs?
What is the main difference between a Defined Contribution (DC) Plan and a Defined Benefit (DB) Plan as per IAS 19?
What is the main difference between a Defined Contribution (DC) Plan and a Defined Benefit (DB) Plan as per IAS 19?
What are the requirements for determining expenses under IAS 19 for a Defined Contribution (DC) Plan?
What are the requirements for determining expenses under IAS 19 for a Defined Contribution (DC) Plan?
How is the discount rate determined for an accounting valuation of a Defined Benefit (DB) Plan according to IAS 19?
How is the discount rate determined for an accounting valuation of a Defined Benefit (DB) Plan according to IAS 19?
For accounting purposes, what must actuarial assumptions used in pension valuations be according to IAS 19?
For accounting purposes, what must actuarial assumptions used in pension valuations be according to IAS 19?
Which financial reporting standards apply to Canadian companies with U.S. ownership for reporting Canadian pension plans?
Which financial reporting standards apply to Canadian companies with U.S. ownership for reporting Canadian pension plans?
What is the primary focus of the funding method 'fully funded on a going concern basis' for a defined benefit pension plan?
What is the primary focus of the funding method 'fully funded on a going concern basis' for a defined benefit pension plan?
Which characteristic is unique to Benefit Allocation Methods for DB pension plans?
Which characteristic is unique to Benefit Allocation Methods for DB pension plans?
How does the Cost Allocation Method differ from the Benefit Allocation Method in terms of current service costs for individual members in a DB pension plan?
How does the Cost Allocation Method differ from the Benefit Allocation Method in terms of current service costs for individual members in a DB pension plan?
Which statement accurately describes the relationship between funding method and the ultimate cost of a DB pension plan?
Which statement accurately describes the relationship between funding method and the ultimate cost of a DB pension plan?
How do forecast funding methods differ from cost and benefit allocation methods for DB pension plans?
How do forecast funding methods differ from cost and benefit allocation methods for DB pension plans?
What is the primary purpose of a funding method in a DB pension plan according to the text?
What is the primary purpose of a funding method in a DB pension plan according to the text?
Which characteristic is an essential feature of Cost Allocation Methods for DB pension plans?
Which characteristic is an essential feature of Cost Allocation Methods for DB pension plans?
What is the main difference between Benefit Allocation and Cost Allocation Methods for DB pension plans?
What is the main difference between Benefit Allocation and Cost Allocation Methods for DB pension plans?
What aspect of a DB pension plan does the 'going concern basis' funding method primarily address?
What aspect of a DB pension plan does the 'going concern basis' funding method primarily address?
Which statement correctly describes how actuaries use different methods to express defined benefit pension plan funding requirements?
Which statement correctly describes how actuaries use different methods to express defined benefit pension plan funding requirements?
What is a possible argument made against the use of advance funding in the private sector?
What is a possible argument made against the use of advance funding in the private sector?
What is a possible consequence of overfunding a Defined Benefit (DB) pension plan?
What is a possible consequence of overfunding a Defined Benefit (DB) pension plan?
What is the purpose of a funding policy for a pension plan?
What is the purpose of a funding policy for a pension plan?
Why are actuarial valuations performed in respect of a DB pension plan?
Why are actuarial valuations performed in respect of a DB pension plan?
What does the Going Concern Basis assume in a triennial valuation for a DB pension plan?
What does the Going Concern Basis assume in a triennial valuation for a DB pension plan?
How would you differentiate 'fully funded on a wind-up basis' from 'fully funded on a going concern basis'?
How would you differentiate 'fully funded on a wind-up basis' from 'fully funded on a going concern basis'?
In the context of pension plans, what does 'actuarial assumptions prescribed by pension standards legislation, including grow-in benefits' refer to?
In the context of pension plans, what does 'actuarial assumptions prescribed by pension standards legislation, including grow-in benefits' refer to?
Which component is NOT typically included in the funding policy for a pension plan?
Which component is NOT typically included in the funding policy for a pension plan?
'Politically motivated interference in investment processes' is an argument made against advance funding in which sector?
'Politically motivated interference in investment processes' is an argument made against advance funding in which sector?
'Annual valuations may be needed for underfunded plans' is listed as one reason for actuarial valuations. In what context does this statement apply?
'Annual valuations may be needed for underfunded plans' is listed as one reason for actuarial valuations. In what context does this statement apply?
What does IAS 19 define as the 'net defined benefit liability (asset)'?
What does IAS 19 define as the 'net defined benefit liability (asset)'?
In the context of a pension plan, when does a net DB asset exist?
In the context of a pension plan, when does a net DB asset exist?
What is the main difference between a net DB liability and a net DB asset in a pension plan?
What is the main difference between a net DB liability and a net DB asset in a pension plan?
How is the net interest on DB liability (or asset) recognized in financial statements under IAS 19?
How is the net interest on DB liability (or asset) recognized in financial statements under IAS 19?
What is one component of 'defined benefit cost for the period' under IAS 19?
What is one component of 'defined benefit cost for the period' under IAS 19?
Why does IAS 19 impose a limit on the net DB asset in a pension plan?
Why does IAS 19 impose a limit on the net DB asset in a pension plan?
What are some complications related to the limit imposed on the net DB asset by Canadian pension standards legislation?
What are some complications related to the limit imposed on the net DB asset by Canadian pension standards legislation?
Which financial statement does remeasurements of net DB liability (or asset) get recognized in under IAS 19?
Which financial statement does remeasurements of net DB liability (or asset) get recognized in under IAS 19?
'Asset ceiling' in a pension plan refers to:
'Asset ceiling' in a pension plan refers to:
The net defined benefit liability (asset) under IAS 19 is the difference between the present value of the plan's assets and the fair value of the plan's obligations.
The net defined benefit liability (asset) under IAS 19 is the difference between the present value of the plan's assets and the fair value of the plan's obligations.
If a company's pension plan assets are valued at $900,000 and its pension obligations amount to $1 million, it results in a net DB asset.
If a company's pension plan assets are valued at $900,000 and its pension obligations amount to $1 million, it results in a net DB asset.
The defined benefit cost for the period under IAS 19 includes remeasurements of net DB liability (or asset) recognized in profit or loss.
The defined benefit cost for the period under IAS 19 includes remeasurements of net DB liability (or asset) recognized in profit or loss.
IAS 19 imposes a limit on the net DB asset to prevent understating assets available to the employer.
IAS 19 imposes a limit on the net DB asset to prevent understating assets available to the employer.
Asset ceiling is defined as the minimum funding requirement set by IAS 19 for pension plans.
Asset ceiling is defined as the minimum funding requirement set by IAS 19 for pension plans.
Canada's Minimum Funding Requirements may enhance an employer's ability to reduce contributions to pension plans.
Canada's Minimum Funding Requirements may enhance an employer's ability to reduce contributions to pension plans.
The service cost component of defined benefit cost under IAS 19 includes only current service costs, excluding past service costs.
The service cost component of defined benefit cost under IAS 19 includes only current service costs, excluding past service costs.
Actuarial gains/losses are recognized as 'other comprehensive income' in financial statements according to IAS 19.
Actuarial gains/losses are recognized as 'other comprehensive income' in financial statements according to IAS 19.
The fair value of plan assets must always exceed the present value of plan obligations for a pension plan to have a net DB asset.
The fair value of plan assets must always exceed the present value of plan obligations for a pension plan to have a net DB asset.
Fully funded on a going concern basis valuation and accounting valuation always use the same actuarial basis and assumptions according to IAS 19.
Fully funded on a going concern basis valuation and accounting valuation always use the same actuarial basis and assumptions according to IAS 19.
