Question #5 – RSP/DB Plan

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?

  1. $1,000
  2. $8,400
  3. $9,000
  4. $9,600

Solution:

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.