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
- 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.
- 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.
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