Actuarium

SOA RET DARetirement Benefits — Design & Accounting (U.S.)

Fellowship (FSA)
5 hours·≈10 written-answer questions·≈400 study hours

Syllabus learning objectives

Official syllabus

Paraphrased from the SOA syllabus so the study-plan builder and practice sets track the topics you will actually be examined on. Weights are the official topic ranges.

Plan design (DB, DC, hybrid) & policy

30%
  • Compare defined benefit, defined contribution, cash balance and other hybrid designs from sponsor and participant perspectives.
  • Evaluate plan design features: accrual formulas, early retirement subsidies, vesting, optional forms.
  • Assess the effect of design on risk sharing, retirement adequacy and workforce management.
  • Describe social insurance (Social Security) design and its interaction with employer plans.

Actuarial cost methods & assumptions

30%
  • Compute normal cost and accrued liability under unit credit, projected unit credit, entry-age normal and aggregate methods.
  • Select and justify economic and demographic assumptions consistent with ASOP 27 and 35.
  • Analyse actuarial gains and losses by source.
  • Evaluate the effect of assumption changes on liabilities and contributions.

Pension accounting (ASC 715 / IAS 19)

25%
  • Compute service cost, interest cost, expected return and amortisation components of net periodic pension cost.
  • Determine funded status, AOCI items and settlement/curtailment accounting.
  • Compare U.S. GAAP and IFRS pension accounting treatments.
  • Explain the effect of discount-rate selection on the balance sheet and P&L.

Retirement risk & de-risking

15%
  • Assess longevity, investment and interest-rate risks borne by sponsors and participants.
  • Evaluate de-risking options: LDI, lump-sum windows, annuity buy-outs and buy-ins.
  • Quantify the cost of a pension risk transfer relative to accounting and funding measures.
  • Recommend a glide path consistent with sponsor risk tolerance.

Lecture videos for this exam

Open the full video library →

Introduction to Pension Accounting: Basics

Farhat Lectures. The # 1 CPA & Accounting Courses · Pensions & Retirement

Pensions (IAS 19) - Introduction - ACCA SBR

OpenTuition · Pensions & Retirement

Overview

DA covers how retirement plans are designed and accounted for: cost methods, assumption selection, GAAP/IFRS pension expense and the sponsor's risk-management toolkit.

Duration
5 hours
Questions
≈10 written-answer questions
Style
Computer-based written answer with case study
Credit
Retirement track FSA requirement
Passing
≈ 60–65% of points

Syllabus map

Plan design (DB, DC, hybrid) & policy
30%
Life Contingencies Primer
Actuarial cost methods & assumptions
30%
Life Contingencies PrimerInterest Theory and Time Value of Money
Pension accounting (ASC 715 / IAS 19)
25%
Interest Theory and Time Value of Money
Retirement risk & de-risking
15%
Risk Measures and CapitalReinsurance Structures and Pricing

Key formulas

Unit credit   ALx=Bx⋅a¨r(12) vr−x r−xpx,NCx=bx⋅a¨r(12) vr−x r−xpx\;AL_x=B_x\cdot\ddot a^{(12)}_{r}\,v^{r-x}\,{}_{r-x}p_x,\qquad NC_x=b_x\cdot\ddot a^{(12)}_{r}\,v^{r-x}\,{}_{r-x}p_x

Entry-age normal (level % pay)   NC=PVFBePVFSe⋅Sx\;NC=\dfrac{PVFB_e}{PVFS_e}\cdot S_x

Net periodic pension cost   =SC+IC−ER+Amort(PSC)+Amort(gain/loss)\;= SC+IC-ER+\text{Amort(PSC)}+\text{Amort(gain/loss)}

Corridor amortisation   max⁡ ⁣(0,∣G/L∣−10%max⁡(PBO,Assets))avg future service\;\dfrac{\max\!\big(0,|G/L|-10\%\max(PBO,\text{Assets})\big)}{\text{avg future service}}

Funded status   =Plan assets−PBO\;=\text{Plan assets}-PBO

Study strategy

  1. Draw the timeline for every cost-method question; identify entry age, attained age and retirement age before writing formulas.

  2. For accounting, build the roll-forward table (PBO, assets, AOCI) — most marks are in the table.

  3. Design questions want both sponsor and participant perspectives, with a recommendation.

Common traps

  • Confusing projected unit credit (salary projected) with traditional unit credit.

  • Amortising the full gain/loss instead of the excess over the corridor.

  • Forgetting settlement accounting when recommending a lump-sum window.

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