Department of Statistics and Actuarial Science ACTU 404 Assignment for the Term 1. The Board of Directors of Afrique Construction limited decided to establish a defined benefit pension scheme for its employees. The board members have tasked Cedi Consults and managers of the scheme to ensure that the firm is never in any situation where unfunded liabilities exist. You are a trainee Actuary with Cedi Consult your supervisor has asked you to prepare a report, to be given to the Board of Directors of Afrique Construction providing a detailed review of tall funding methods that exist and identifying the funding method which will be most suitable for Afrique Construction given their fundamental requirement of the defined benefit scheme. 15 marks 2. The defined benefit pension scheme for Pharma Industries has been in existence for 25 years. At the beginning of 2012, the following information was made available from the scheme managers: Description Projected Benefit Obligation (PBO) Accumulated gain (loss) Discount rate Expected return on Plan Assets Actual return on Plan Assets Fair value of plan assets Pension liability Unrecognized Past Service Cost Amount (GHS) 135,000 20,000 15% 15% 30,000 100,000 9,400 40,000 During the year, contributions to the pension plan was 14,000GHS and benefits paid to employees was 8,000GHS, service cost for the year was 10,000GHS It should also be noted that the average remaining service period of Active employees is 20 years. (Use the corridor approach to amortize the accumulated gains.) Calculate i. The pension expense and pension liability which will be disclosed in the financial statements for the year 2012. ii. Show a reconciliation of the plan assets and liabilites to the pension liability 15 marks