Pensions

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Department
Management
Course
MGT322H5
Professor
Peter Thomas
Semester
Fall

Description
Pensions: Issuesimp points: -money put into an independent trust, to protect the employee in case the company goes out of business. - For DCP, employers contribution is defined, hence the risk of the investments is on the employee once the contribution is made to the trust. (promise fulfilled) - For DBP, employer retains the risk even after putting in money in the trust because they must fulfill the promise of delivering the promised pensions. So risk not transferred till pension is collected. - Pension plan liabilities are off balance sheet, but they meet the definition of a liability because employer retains the risk of non performance by the trust. This is a good example of a political compromise where economic reality is not well portrayed. - Pension plan assets are off balance sheet, but if the risk is on the employer if the trust doesnt perform well, they should be rewarded if the trust performs better than expected. Not likely an asset because the questions aredoes the co
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