Question about employee benefit

This topic has 2 replies, 2 voices, and was last updated 10 years ago by Ruby.

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May 4, 2015 at 5:06 pm #244041
Tianxiao
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Hi,
” After conculting with the actuaries, the company decide to reduce its contributions for the year to $45 million.”
Why this statement would result to an increase of current liability by $45 million ? I thought contribution received only causes an increases in plan assets.
May 5, 2015 at 3:54 am #244096
Tianxiao
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Anyone?
May 5, 2015 at 5:38 pm #244212
Ruby
Member
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Liability on defined benefit plan =
opening net assets/deficit
+ finance cost
+ Current year service cost
+ past service cost
– Contribution paid to scheme.
Therefore, if you reduce the contribution paid, your liability will increase.
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