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How to Calculate Minimum Required Contribution that has to be paid by Employer to fund the Plan

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As we know that Under DB pension plans, Employer has to contribute towards the plan, so today we are going to see how much an employer has to contribute and up to how much employer can avail the Tax benefit. Let’s Start with basic terminologies: 1.Stabilized rates: Pension regulators has set the Segmented interest rates that we can use to calculate our Liability.
2.Non-Stabilized rates: Non-stabilized rates are lower than stabilized rates, so technically Liability will be higher under non-stabilized rates.
3.FT= Funding Target, it means the liability of a plan calculated using 3 segment stabilized interest rates.
4.FT(max) = Funding Target, it means the liability of a plan calculated using non-stabilized interest rates.
5.TNC = Target Normal Cost = Present value of benefits accruing during the plan year.
6.EIR = Effective interest rate; it is the single rate of interest which is used to determine the PV of plan’s accrued benefit, would result in an amount equal to the Funding target of the p…