Question

13-)The 2011 values for a pension fund are provided in the table below, in millions of dollars.

Pension Assets
Beginning value on 1 January Change in value in 2011	$90.11 10.30%
Pension Liabilities         Beginning value on 1 January Change in value in 2011	$27.23 60%

Calculate the surplus return for this fund

Answer 1

1) CALCULATE SURPLUS RETURN FOR THIS FUND :

  Surplus is the excess of the value of the assets of a pension fund over the value of the plan's liabilities under the pension plan as calculated in accordance with the Pension Benefits Standards Regulations, 1985. Surplus can only arise in the context of a defined benefit plan

SURPLUS = PENSION ASSETS - PENSION LIABILITIES

PERSONAL ASSETS.

  BEGINNING VALUE ON 1ST JAN = $ 90.11

CHANGE IN VALUE @ 10.30% =($ 90.11 * 110.30) / 100

= $ 99.39

PERSONAL LIABILITIES

BEGINNING VALUE AS ON 1ST JAN = $ 27.23

CHANGE IN VALUE @ 60% = ( $ 27.23 * 160) / 100

= $ 45.568

SURPLUS RETURN = $ 99.39 - $ 45.56

= $ 53.83