Phil has a defined-benefit plan that pays him a pension of two percent of his average best three years' earnings.His earnings are as follows: 2008,$58000 ; 2009,$62000 ; 2010,$65000 ; 2011,$66000 ; 2012,$62000 ; 2013,$72000 ; 2014,$75 000.What will be his annual pension benefit if he was with Plastis Co.for 22 years?

Question

Quizplus · Accepted Answer

To calculate Phil's annual pension benefit, we first need to find his average best three years' earnings.

Step 1: Calculate the average of Phil's three highest earning years.

- Phil's three highest earning years are 2013, 2014, and 2010.
- Average of these years = (72,000 + 75,000 + 65,000) / 3 = $70,666.67

Step 2: Calculate Phil's annual pension benefit.

- Phil's annual pension benefit = 2% x average best three years' earnings x years of service
- Given that Phil has worked for Plastis Co. for 22 years, we can substitute in the values:
- Annual pension benefit = 2% x $70,666.67 x 22 = $31,238.68

Therefore, Phil's annual pension benefit will be $31,240. The closest option to this is option C, which is the correct answer.

Phil Has a Defined-Benefit Plan That Pays Him a Pension