Planit:Calculating and Entering Defined Benefit Pension Plans Exercise

From Planipedia

This case study is specific to financial planning in Canada, so has fixed values rather than indices by country. For a similar case study applicable to other countries, please see Planit:UK Defined Benefit Pension Plans Exercise, Planit:Malaysian Civil Servant Pension Exercise or Planit:Entering Other Revenues Exercise.

Solve for the following problem:

Miss Mary Joe is a 40-year old teacher, who will receive a Defined Benefit Pension Plan upon retirement. She has been working there for 10 years, currently earning a $40,000 salary, and plans to retire in another 20 years. Her assumed inflation is 3.0%, and her pension plan is integrated with CPP. Her FAE are based on the last 3 years, and the Benefit Rate is 1.5%. The Normal Retirement Age is age 60, with an Early Retirement Reduction factor of 5.0%

What is the value of Mary Joe’s Lifetime Pension and Pension Bridge?

Solve for the following problem:

David Lastname expects to receive a pension when he retires at age 55. David has been working at his place of business for 14 years. David elected to reduce his pension to gain 60% survivor death benefits, and his Final Average Earnings are based on the past 5 years. His pension plan is not integrated with CPP, and the pension formula is 1.5%. The Normal Retirement Age is 65, with an early retirement factor of 4.04%.

Input this data into the Pensions and Other Revenues screen for the client. What did you enter for the following data entry fields?

• Amount Per Year: $
• From Year:
• To Year:
• Percent Taxable:  %
• Amount on Death:  %
• Model As:
• Additional Increase:  %

Check the accuracy of your client against the answer key