4. Life Contingencies

Pension Mathematics — Quiz

Test your understanding of pension mathematics with 5 practice questions.

Practice Questions

Question 1

Which actuarial cost method for defined benefit plans explicitly considers future salary increases and uses a discount rate to determine the present value of future benefits, attributing a unit of benefit to each year of service?

Question 2

A defined benefit pension plan has a Projected Benefit Obligation (PBO) of $$ \$6,000,000 $ and plan assets of $ \$4,800,000 $$. What is the funding ratio of the plan?

Question 3

In the context of pension accounting, what does 'actuarial gain or loss' primarily arise from?

Question 4

Which of the following best describes the 'interest cost' component of net periodic pension cost?

Question 5

A defined benefit pension plan has a Projected Benefit Obligation (PBO) of $$ \$9,000,000 $. The plan assets are valued at $ \$7,200,000 $$. What is the unfunded PBO?