Question

Which of the following items does not increase the net pension liability and pension expense for a government offering a defined benefit pension plan?

A. Service Costs
B. Interest
C. Benefit payments to retired employees
D. Non of the above, all of these increase net pension liability and pension expense

Answer 1

Benefit payments to retired employees do not increase the net pension liability and pension expense for the government offering a defined benefit pension plan.

Step-by-step explanation:

For a government offering a defined benefit pension plan, Benefit payments to retired employees do not increase the net pension liability and pension expense. Benefit payments to retired employees are already accounted for and are not considered an additional increase in liability or expense.
On the other hand, Service Costs and Interest both increase the net pension liability and pension expense. Service Costs refer to the cost of providing future pension benefits to current employees. Interest refers to the interest that accumulates on the projected benefit obligation over time.

Therefore, the correct answer is C. Benefit payments to retired employees.