Question

Pension plan assets were $2,100 million at the beginning of the year and $2,272 million at the end of the year. At the end of the year, retiree benefits paid by the trustee were $46 million and cash invested in the pension fund was $50 million.

What was the percentage rate of return on plan assets?

Answer 1

Solution :-

Given data,

Plan assets at year end = $2,272 millions

Plan asset at beginning = $2,100 millions

Cash distributions = $50 millions

Retiree Benefits = $46 millions

• Here we need to findout the percentage rate of return on plan assets.

percentage rate of return on plan assets = [ Actual return / Assets at beginning ] * 100

Where ,

Actual return = [ $2,272 millions + $46 millions ] - [ $2,100 millions + $50 millions ]

= $2,318 millions - $2,150 millions

= $168 millions

Actual return = $168 millions

Percentage rate of return on plan assets = [ $168 millions /  $2,100 millions ] * 100

= 0.08 * 100

= 8%

Percentage rate of return on plan assets = 8%