knowledge topics
DB Pension Plan Benefits
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Identify factors that influence the pension benefit amount for a defined benefit pension plan member, such as:
- Member’s length of pensionable service
- Member’s contributions to plan
- Employer’s funding of plan
- Identify factors used to determine the normal retirement date for a defined benefit pension plan member, such as:
- Member’s age
- Length of pensionable service
- Member’s age plus years of pensionable service
- Identify the events that may precipitate an early retirement, such as:
- Voluntary choice
- Satisfying the pension factor for an unreduced pension
- Permanent disability
- Termination of employment
- Explain the types of benefit formulas for determining the pension income payable to a defined benefit pension plan member, such as:
- Final earnings
- Best average
- Career average
- Flat benefit
- Estimate the projected pension benefit for a defined benefit pension plan member.
- Estimate the projected survivor benefit for a defined benefit pension plan.
- Estimate the tax impact of receiving a pension benefit from a defined benefit pension plan.
- Identify that the employer retains the risk for the value of the pension benefit received from the plan.
- Explain the pension benefit options that may be available to a defined benefit pension plan member.
- Life income
- Life income with a guarantee period
- Joint and survivor pension
- Joint and survivor pension with a guarantee period
- Explain the relationship between defined benefit pension plan member benefits, survivor benefits and guarantee periods.
- As survivor benefits are increased
- As survivor benefits are decreased
- As guarantee periods are increased in length
- As guarantee periods are decreased in length
- Identify that a spouse† may waive their right to survivor pension benefits.
- Explain the ancillary benefits that a defined benefit pension plan member may receive, according to the Financial Services Commission of Ontario (FSCO),1,†† such as:
- Bridging benefits
- Temporary supplemental benefits
- Disability benefits
- Death benefits
- Early retirement options and benefits
- Explain how each of the factors may impact the decision to commence receiving a pension benefit from a defined benefit pension plan, such as:
- Life expectancy
- Cash flow needs
- Impact on government benefits
- Tax impact
- Evaluate the factors to consider that may impact the decision to commence receiving a pension benefit from a defined benefit pension plan.
† Unless otherwise noted, “spouse” in the defined benefit and defined contribution pension plan sections includes common-law partners in jurisdictions that recognize common-law partners under pension legislation.
†† While the FSCO website provides information related to pension plans in Ontario, the information referenced here is generic across the country.
Glossary of Verbs (mouse over to see definition)
-
Define
To state exactly the meaning of
-
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
-
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
-
Compare
To note the similarities and differences between two or more things
-
Estimate
To determine an approximate value for
-
Calculate
To find the value using mathematics
-
Convert
To change from one form or purpose to another
-
Evaluate
To reach a conclusion or make a judgement through careful study
-
Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK
previous / DB Pension Plan Transfers