1)
What kind of pension plans does P&G provide
its employees?
P&G provides several benefits to its employees including
pension. These post-employment benefits are provided to employees all over the
world. This plan provides health care and life insurance for its retired employees.
These plans are fully funded. Retired employees pay stated percentage of health
benefit. The post retirement plans are known as contribution plans which are
provided to almost every US employee. The pension is given on the basis of
years of service and salary which and employee had when he was in service. In
case of US the contribution plans is made annually and increase or decreases by
margin of 10%. Net for this plan is nearly 14% of ages of total number of
participants.
2)
What was P&G’s pension expense for 2018,
2017 and 2016 related to its defined benefit plan?
Defined benefit plan of P&G is partially funded and it
is available for selective employees. In
2018, average return on pension asset is 6.8% and on OPEB plans is 8.3%. The
expense for 2018, 2017 and 2016 for defined benefit plan for year 2018 is $292,
for year 2017 it is $270 and for 2016 it is $292.
3)
What is the impact of P&G’ pensions plan for
2018 on its financial statements?
For the year 2018, the P&G’s financial statement was
8.3% for pension plans.
Change in benefit Obligation
|
PENSION BENEFITS IN 2018
|
Benefit obligation at the start of year
|
$ 60,160
|
Service cost
|
$ 280
|
Interest cost
|
$ 348
|
Participant’s contribution
|
$ 13
|
Amendments
|
$ 12
|
Special termination benefits
|
$ 8
|
Currency translation and other
|
$ 148
|
Benefit payments
|
$ 589
|
BENEFIT OBLIGATION AT THE END
OF YEAR
|
$ 15,658
|
CHANGE IN PLAN ASSETS
|
PENSION BENEFITS
|
Fair value of plan assets at beginning of year
|
$ 10, 829
|
Actual return on the plan assets
|
$ 553
|
Employer contributions
|
$ 406
|
Participant’s contribution
|
$ 13
|
Currency translation and other
|
$ 55
|
Benefit payments
|
$ 589
|
FAIR VALUE OF ASSETS AT THE
END OF YEAR
|
$ 11, 267
|
Funded status
|
$ 4,391
|
4)
What information does P&G provide on the
target allocation of its pension assets? (Compare the asset allocation for “Pensions
and Other Retiree Benefits.”) How do the allocations relate to the expected
returns on these assets?
When asset allocation for pensions and other
retiree benefits were compared funded status was $ 4,391 in 2018 for pension
and it is $ 1,519 for retiree benefits in the similar year. Actual return on
pension benefits for year 2018 is $ 553 while the figure $ 481 for same year in
case of retiree benefits. The planned assets are diversified by many investor
managers and liquid funds are selected. To figure out broad market equity