Assume a pension plan's actuarially-computed liabilities are greater than the actuarial value of the assets.How does this difference between assets and liabilities affect the actuarially determined contribution to the pension plan required for the following year?

Question

Quizplus · Accepted Answer

When a plan's actuarial liabilities exceed the actuarial value of assets, there is an unfunded actuarial accrued liability (UAAL). In such a scenario, the required contribution for the upcoming year needs to include an amortization of a portion of the UAAL to ensure that the plan is able to meet its future obligations. This is done to gradually eliminate the deficit and bring the plan back to a funded status. Therefore, Option D is the correct answer.

Assume a Pension Plan's Actuarially-Computed Liabilities Are Greater Than the Actuarial