knowledge topics
DB Pension Plan Attributes
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Define a defined benefit pension plan.
- Explain the attributes of a defined benefit pension plan, such as:
- Eligibility criteria
- Minimum and maximum contributions
- Deductibility of contributions
- Costs
- Retirement dates (early, normal, deferred)
- Pension requirements
- Vesting provisions
- Indexing provisions
- Bridging benefits
- Post-retirement benefits
- Transferability of benefits
- Termination options
- Explain the advantages and disadvantages of a defined benefit pension plan, according to the Financial Consumer Agency of Canada (FCAC).1
- Identify the funding status for a given defined benefit pension plan.
- Underfunded
- Fully funded
- Identify the criteria that may be used to determine funding requirements for a defined benefit pension plan, such as:
- Pension plan solvency ratio
- Number of years since last valuation
- Identify the funding requirements of a given defined benefit pension plan.
- Explain the risk of an underfunded defined benefit pension plan.
- Explain the tax treatment of income earned within a defined benefit pension plan.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK
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