In the consulting firm where you are employed, you are considered the pensions guru. Whenever a client

Question:

In the consulting firm where you are employed, you are considered the “pensions guru.” Whenever a client has a question related to pensions, he or she is referred to you for advice. Recently, two clients approached you with the following unrelated issues: 

Case 1: This year the stock market took a big plunge. Your client is worried that not only did they lose significant sums on their investments, but also their net pension obligations will sky rocket. The client is also wondering if this will have a negative effect on the company’s net income. 

Case 2: The client is a software company. It is February 2020 now, and its pension plan specifies that upon retirement, an employee will receive 2% of the last annual salary per year, for each year of service provided. Similar plans are common with most other software companies. During the last year (2019), most software companies amended their pension plan to increase the pay at retirement from 2% to 2.5%, retroactively. Your client company has not made such a change yet. However, the union is very eager to have this change implemented, and was already asking for a meeting to discuss the issue. Your client is asking for your advice on whether the pension liability for 2019 should be calculated based on 2% or 2.5%.


Required:

Prepare a separate report for each client addressing their concerns.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: