[Parthamis]

I am reviewing Pensions for the FAR exam on 9/08.

I do not understand the calculation for the E in SIR AGE, or if it even matters…
please advise.

[BatmanInTraining]

Hey I wouldn't worry about it too much come exam day, primarily because it is not often used anymore by companies and most of my review questions ignore it. However I had one review question that dealt with it and I'll explain it as best as I can. Primarily, they will provide it as a “Unrecognized net transition asset” and you will amortize over the greater (Pensions are GRRRREAT!) of 15 years, or the average employee service life. IF you need to calculate it, its PBO minus FV plan assets in the beginning of year which would be the “Initial unfunded Obligation” or “Transition asset/liability”. Im 99% sure how that works as it says in my book. However I think the amortization is far (forgive the pun myself) more likely to be tested, if at all.

[IwannabeaCPA2017]

to my understanding the E is usually provided in questions. I have yet to come across a question that even ask for that. But per Becker you basically take the funded status and divide by 15 or the service life whichever is GREATER.
There is just so much to even know.. its like the moment you get PEnsion, CF and bonds down you forget other topics like construction (Percentage completion vs completed contract) and FIFO vs LIFO. This exam cover so many topic that some luck is really needed haha. From experience those small topics may show up.. The FOR SURE topics def are GOVT and NFP.

[Author]

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