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Old 11-04-2008, 04:02 PM
Actiger Actiger is offline
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Default Rick's 431 Problem 11

Background: this questions uses 0% salary scale.

I think the solution to this problem has some labeling issues.

1) The fact that 190,000 earnings used to calculate NC is called "2009 pay" made me think the plan uses final pay. I think it should be changed to label it "projected final average earnings."

2) Because of this issue, the last line in the first paragraph should be deleted. It says "since there is no salary scale in this problem, you will get identical results using traditional Unit Credit."

If you use Traditional Unit Credit (TUC), you end up with (170 + 180 + 190) / 3 for 12/31/08 benefit, which clearly is different than the number calculated using PUC method.
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Old 11-04-2008, 04:31 PM
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Rick_G Rick_G is offline
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Quote:
Originally Posted by Actiger View Post
Background: this questions uses 0% salary scale.

I think the solution to this problem has some labeling issues.

1) The fact that 190,000 earnings used to calculate NC is called "2009 pay" made me think the plan uses final pay. I think it should be changed to label it "projected final average earnings."
The problem does identify the benefit as based on "final three-year average compensation".

Quote:
Originally Posted by Actiger View Post
2) Because of this issue, the last line in the first paragraph should be deleted. It says "since there is no salary scale in this problem, you will get identical results using traditional Unit Credit."

If you use Traditional Unit Credit (TUC), you end up with (170 + 180 + 190) / 3 for 12/31/08 benefit, which clearly is different than the number calculated using PUC method.
You are correct. Next year I'll create another version of this problem using traditional Unit Credit.
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