ACCT 387
Memo Assignment #4 (50 Points Possible): “Relative Advantages of Alternative Pension Plans”
Background
You have a friend who will be graduating with an engineering degree from Iowa State University
this Spring and is considering job offers from two different employers. The salaries being offered by the
two firms are essentially the same. However, one employer has a defined pension plan while the other
employer has a defined contribution pension plan.
Assignment Goal
Your friend, who knows you are an accounting major, is seeking your advice and consul regarding
the relative advantages, from an employee’s perspective, of the two alternative types of pension plans.
Note: Your friend is not asking for a definitive statement from you regarding which type of pension plan is
“best” for she/him. Specifically, your friend as asked you to write her/him a one page memo that addresses
the following questions she/he has:
1. What is the difference between a defined benefit and a defined contribution pension plan and how
could those differences potentially impact the pension benefits that she/he ultimately receives in
retirement?
2. What information/data regarding the financial health of company‘s pension plan can she/he garner
from reading each company’s pension footnote(s)?
3. What, if any, advantages do you see a financially sound defined benefit pension plan providing and
employee that a defined contribution plan does not?
4. What, if any, advantages do you see a financially sound defined contribution pension plan providing
and employee that a defined benefit pension plan does not?
Purpose
Your memo should answer the specific questions posited to you by your friend. Additionally, you should
provide any additional comments that you feel are germane.
Audience
While your friend—your direct audience—will be using the information contained in your memo to increase
her/his understanding regarding alternative pension plans other students, including yourself, may also find this
information helpful for future decision-making. You can assume that your friend, while not an accountant, has
significant knowledge about how business enterprises operate and report their financial results to stockholders;
therefore, knowing you friends background should help you as you prepare this memo.
Tasks Required
Besides your text, you should feel free to use other sources (e.g., relevant Wall Street Journal articles) if you like,
but this additional research is not necessary for completing the assignment successfully.
Evaluation Criteria
See rubric (handed out with this assignment sheet)
Draft of Memo Due (Monday) April 9th for Peer Review
Final Memo, Draft of Memo and Peer Review Documents Due Friday April 13th at Beg. of Class