VISICHERUNGSWESEN / ACCOUNTING FOR PENSION

A pension plan is made up of segregated assets (held by a trustee and invested over the long-term) and as determined by an actuary, a long-term liability to employees for pension entitlements earned.

• defined contribution plan

• defined benefit plan

• actuary

• contributory versus non-contributory plan

• vesting

Six elements of expense are combined to ascertain pension expense.

1.  Accrued obligation                                  €€€.€€,--

2.  Plan assets (at market-related value)       €€€.€€,--

3.  Unamortized past service cost                 €€€.€€,--

4.  Unamortized prior service cost                €€€.€€,--

Unrecognized net gain from experience and

5.  actuarial gains and losses

(only minimum annual amortization is charged)                                                                 €€€.€€,--

6.  Interest rate (for obligation only)            %

The difference between the amount paid by the company to the trustee and the expense is a deferred cost (if a debit) or a deferred liability (if a credit).

Accumulated benefit method

Projected benefit method

Level contribution method