P16-5. Nature of pension plans (L.0. 16-1) (Medium - 10 minutes) Sue Cameron (see P16-4) has a twin brother, Tom, who works for the Government of Alberta. Tom is covered by a defined benefit pension plan. Tom just turned 45 years old, and expects to retire at age 65 . At that time, the pension plan will pay Tom annual pension payments equal to 3% of his final year's salary for each year of services rendered. The pension payments will continue until Tom's death, which actuaries expect to be when he turns 80 . For the current year, Tom will earn $50,000 and this rate is expected to increase by 8% per year. Assume that the Alberta government uses a 10% interest rate for its pension obligations. Required: Determine the current service cost for Tom Cameron's pension for the past year (the year just before he turned 45 ). P16-6. Accounting for defined contribution plans (L.O. 16-2) (Easy - 3 minutes)