Chapter

Accounting for Defined Benefit Plans

August Baker, Dennis E. Logue and Jack S. Rader

in Managing Pension and Retirement Plans

Published in print November 2004 | ISBN: 9780195165906
Published online July 2005 | e-ISBN: 9780199835508 | DOI: http://dx.doi.org/10.1093/019516590X.003.0010
 Accounting for Defined Benefit Plans

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This chapter outlines the basics of accounting to help pension fund decision makers understand the accounting data typically provided in financial statements. The first section reviews the basics of pension fund accounting and illustrates the key components of pension fund accounting data. The second section examines some of the critical assumptions that are made in pension accounting and how those assumptions may differ from economic reality. Finally, the chapter examines the investment and pension fund management implications of pension fund accounting and shows how accounting-based decisions can be suboptimal for sponsors, plans, and beneficiaries.

Keywords: pension fund accounting; financial statements; defined benefit plans; pension plans; assets; returns; investments; expenses

Chapter.  7530 words. 

Subjects: Financial Markets

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