o funds Tom’s pension, how much should Zenon Corp. have in their pension fund at the beginning of Tom’s first year of retirment.

Tom began working for Zenon Corporation at age 40 and immediatly qualified for the company penison plan. Tom retired at the age of 65, after 25 years of service. The pension provided Tom with a $35,000 annual pension, to be paid at year-end, for 15 years.

Assume a constant interest rete of 8% during Tom’s 25 years of working and 7% since Tom’s retirement, per actuarial estimates. Zenon corporation funds their pension using a constant amount at the end of each year during the employment period.

1 What type of plan does Zenon Corporation maintain for their employees?

2 T

3 How much should Zenon pay to the funding trustee each year-end during Tom’s 25 year employment period to fully fund Tom’s pension obligations.

4 Given the data provided, is it possible to calculate the psntion expense for all retired employees at Zenon Corp. for the first year of Tom’s retirment? If yes, calculate the pension expense amount. If no, explain why it is not possible.

 

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