Jodi is part of a defined benefit pension plan with a future benefit that is 2% of her salary for every year worked. After 30 years of service she will receive 60% of her income. She currently makes $50,000 per year. What will her pension adjustment (PA) be for the current year?
the pension adjustment (PA) is calculated as:
(9 x future annual benefit) – 600 which in this case equates to $8,400
The future annual benefit is 2% x $50,000 = $1,000. The answer is b.