AC330 Unit 4 Assignment - Pension Benefit Obligations

Scenario: Precision Company has a defined benefit pension plan for its employees. Payments are made annually to the pension plan equal to 3% of the employee's highest lifetime salary multiplied by the number of years the employee has been with the company. Marci Clark's salary in 2019 was $75,000. Ms. Clark is expected to retire in 20 years. Her salary is expected to increase at an average rate of 4% each year before she retires. As of the January 1, 2019, Ms. Clark had worked for Precision Company for 12 years.

Question 1 Determine the amount of the annual pension payment that should be used in computing Ms. Clark's accumulated benefit obligation (ABO) as of 1/1/2019.