Solution-Calculate the effect of the change

Calculate the effect of the change

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Reference no: EM132996081

Question - Sunrise Landscape's defined benefit pension plan specifies annual retirement benefits equal to 1.2% × service years × final year's salary, payable at the end of each year. Shannon Best was hired by Sunrise at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Best's salary is $80,000 at the end of 2021 and the company's actuary projects her salary to be $230,000 at retirement. The actuary's discount rate is 6%.

At the beginning of 2022, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 7% is the appropriate rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required - Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2022 with respect to Shannon Best.

Reference no: EM132996081

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Calculate the effect of the change

Reference no: EM132996081

Reference no: EM132996081

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