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  #1  
Old 01-22-2017, 12:52 PM
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Default EOM 3 - Tasks 1 & 2

When determining if the benefit formula is appropriate for the three different employees are we coming up with formulas that is ideal for each of the employees or one that works for all the employees?
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  #2  
Old 01-23-2017, 07:47 AM
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It's asking for a single formula to apply to all three, not three formulas.
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Old 06-14-2017, 02:02 AM
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What do you think a reasonable assumption would be about each of the three target employees outlined in the task (i.e. 50k, 100k and 200k) with regards to :

1 - The number of years of past service
2 - Their initial age

When they say "Career Employee" does that mean that they expect us to start the employee (with the three levels of salary) at age 30 with 0 years of prior service?

Additionally,

Task 1 says "confirm a target defined benefit pension for a career employee of the chocolate factory" but then later below the title in bold it says that "your task [is to] determine whether the proposed benefit formula is appropriate for the following .. "

My question is the following : did people put much effort into solving for values that got you above the 70% replacement ratio? or simply say that the 1.3 up to CPP and 1.75 above CPP was not sufficient and move on?

Thanks

Last edited by hyphis; 06-14-2017 at 03:52 AM.. Reason: Additional Question
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Old 06-24-2017, 09:17 PM
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Quote:
Originally Posted by hyphis View Post
What do you think a reasonable assumption would be about each of the three target employees outlined in the task (i.e. 50k, 100k and 200k) with regards to :

1 - The number of years of past service
2 - Their initial age

When they say "Career Employee" does that mean that they expect us to start the employee (with the three levels of salary) at age 30 with 0 years of prior service?

Additionally,

Task 1 says "confirm a target defined benefit pension for a career employee of the chocolate factory" but then later below the title in bold it says that "your task [is to] determine whether the proposed benefit formula is appropriate for the following .. "

My question is the following : did people put much effort into solving for values that got you above the 70% replacement ratio? or simply say that the 1.3 up to CPP and 1.75 above CPP was not sufficient and move on?

Thanks
I would like to think it's a reasonable assumption to say 30 years old and 0 years of prior service because this would be a "bare minimum" career employee. An employee with prior service would exceed the 70% threshold more easily. Note that the question says the employee earns those amounts in 2006, meaning they didn't necessarily work before 2006.

As far as the formula. I plan on testing the 3 employees with the given formula, and if it fails to hit 70% for all 3, provide an alternative formula that will.

This raises another question though. What is the 70% referencing?
It seems the replacement ratio formula (let's say for the CPP) is using 25% of 2 years ago salary, and the denominator of the prior year's salary. This makes it not be equal to 25% but 24% for every year which just looks strange to me. Also note that the Salary input is the "prior year earnings" so for row 1, it's comparing it to two years ago, vs the prior year (but labeling current year!). Are we supposed to be altering something here?
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Last edited by Jet0L19; 06-24-2017 at 09:21 PM..
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Old 09-04-2017, 08:43 AM
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Originally Posted by Jet0L19 View Post
As far as the formula. I plan on testing the 3 employees with the given formula, and if it fails to hit 70% for all 3, provide an alternative formula that will.
I tried the same thing but no matter what I set the accrual rate to, the replacement ratio for $200,000 doesn't change. I wonder if this is due to the 1.5% limit on final pensionable earnings for private Cascadian DB plans. Any thoughts?

I think one could always stop at just elaborating on given replacement ratios since task 1 didn't ask for an improved formula or anything, but not being able to change that 64% kinda drove me crazy.
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Old 09-04-2017, 10:32 AM
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For task 1 i just said it wasn't sufficient. Pretty sure it's impossible due to the 1.5% limit on the higher paid employee and the low covered comp limit for the cpp. I don't think you are required to produce another db formula in task 1. In task 2 you are producing a dc formula that meets the 70% replacement ratio
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Old 09-04-2017, 10:35 AM
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I didn't alter any formulas. If we are supposed to that seems like an odd trick to throw at us
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Old 09-10-2017, 03:07 AM
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This raises another question though. What is the 70% referencing?
It seems the replacement ratio formula (let's say for the CPP) is using 25% of 2 years ago salary, and the denominator of the prior year's salary. This makes it not be equal to 25% but 24% for every year which just looks strange to me. Also note that the Salary input is the "prior year earnings" so for row 1, it's comparing it to two years ago, vs the prior year (but labeling current year!). Are we supposed to be altering something here?[/quote]


Yes, I also confused about this part. Why the worksheet is using the prior year earning to calculate the pension benefit.
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Old 09-10-2017, 04:07 AM
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I didn't alter any formulas. If we are supposed to that seems like an odd trick to throw at us
May I ask one question about Task 1?
Since I didn't meet 70% about each of the three employees without revise any formula in the worksheet. I consider it is inappropriate about this formula based on the assumption provided by our colleague.
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Old 09-10-2017, 10:30 AM
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May I ask one question about Task 1?
Since I didn't meet 70% about each of the three employees without revise any formula in the worksheet. I consider it is inappropriate about this formula based on the assumption provided by our colleague.
Yes that's what you are testing
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