Rogers Inc., has a defined benefit pension plan for its 2,000 employees. It provides covered employees with a pension equal to \(1.5 \%\) of their average salary during the two calendar years of highest pay times the number of years of service, with a maximum of 30 years. Benefits are based on an assumed retirement age of 65 and are reduced or increased to their actuarial equivalents for those employees who retire before or after age 65. The projected benefit obligation of Rogers' plan on December 31,2020 , was \(\$ 180\) million, and the fair value of assets in the fund was \(\$ 207\) million.

Early in 2021 Joel Stave, CFO of Rogers Inc., received a report from the actuaries of Rogers' pension plan that recommended an increase in the assumed rate of increase in future salaries among other things. An annual rate of \(3 \%\) per year had been used for several years; according to the actuaries' experience during the last five years, a period of relatively low inflation, average salaries increased considerably more than that. Actuaries recommended a \(6 \%\) rate that would increase Rogers' year-end projected benefit obligation by \(40 \%\). The actuaries also sent a copy of the report to Aaron Rogers, CEO of Rogers Inc.

Several days after receiving the report, Joel and Aaron were having lunch when the subject of the report came up. Rogers began by saying that initially he feared that a \(40 \%\) increase in the pension obligation would wipe out 2020 profits, but after discussing the astronomical rise in the stock market in 2020 with his broker, he began to think that since Rogers Inc.'s pension fund is heavily invested in equities, the effect of the increase in the salary increase rate might be offset to some extent by the large increase in return on plan assets in 2020. His broker had mentioned to him that the bull market of 2020 caused his company's plan to go from underfunded to overfunded. Rogers then asked Joel what he thought a revision of the salary increase rate would do to 2020 profits, but before he had a chance to respond, they were interrupted and did not have a chance to get back to the subject.

Later that day Joel received an email from Rogers asking him to write a memo explaining what the proposed revision in the salary increase rate would do to profits. Joel will be out of town for several days so he has asked you, his assistant, to draft an email to Rogers.

Required 

Prepare a draft of the requested email.