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Old 04-26-2019, 08:14 PM
ColdLikeFire ColdLikeFire is offline
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Join Date: Nov 2012
College: UMBC - Alum
Posts: 4
Default EOM 3 - Basic understanding of problem :(

I just read through the entire exercise PDF and am struggling to understand the basic background information. I understand the Cascadia Pension Plan (CPP) by itself but I do not understand how it interacts with the private pension plan options. If an employee decides to purchase a private pension plan, they still get the CPP benefit, correct?

The background information lists an example formula of a private DC plan with "11% of final pensionable earnings up to the CPP covered earnings limit and 18.0% of final pensionable earnings in excess of the CPP covered earnings limit" (page 2, paragraph 4). Is this saying the CPP amount is the 11% and the privately purchased pension plan is the 18% of excess? How can the 11% be the CPP plan if the CPP plan is a direct BENEFIT plan?

Also, are these benefits considered yearly benefits or lump sums? I am not too familiar with pension plans in general and think this is where I am struggling.

Thanks in advance,
CLF
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