CGFO Pension Administration 2

Question 1

Which actuarial cost method spreads the total projected benefit cost over the employee's entire working career?

Accepted Answer

Entry Age Normal

Answer

The Entry Age Normal method allocates pension costs evenly as a level percentage of pay from the date of hire to expected retirement.

Question 2

A government pension plan's Unfunded Actuarial Accrued Liability (UAAL) is best described as:

Accepted Answer

The difference between actuarial assets and the actuarial accrued liability

Answer

UAAL represents the portion of the actuarial accrued liability not covered by actuarial assets, reflecting the plan's unfunded obligation.

Question 3

Under GASB 68, what amount must a government employer recognize on its balance sheet related to defined benefit pensions?

Accepted Answer

Net pension liability

Answer

GASB 68 requires employers to recognize a net pension liability (NPL) on their statement of net position, measured as total pension liability minus plan fiduciary net position.

Question 4

The 'corridor method' in pension accounting is used to:

Accepted Answer

Smooth the recognition of actuarial gains and losses over time

Answer

The corridor method defers recognition of actuarial gains and losses outside a defined band, smoothing their impact on pension expense.

Question 5

Which type of governmental pension plan guarantees a specific monthly benefit based on salary and years of service?

Accepted Answer

Defined Benefit Plan

Answer

A defined benefit plan promises a predetermined retirement benefit, typically calculated using a formula involving final salary and service years.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Pension Administration 2