Question

From Amazon's financial information, what type of pension plan does it have and Discuss the reasons why Amazon has chosen this particular plan.

What was the effect of the pension plan onAmazon's financial statements for 2016 and 2017? Explain.

What alternative penion plan are available and what should Amazon consider as the alternative pension plan?

Answer 1

Answers

To: The CEO

From:

Subject: Pensions

Date:

            In this memo report, I will provide a critical analysis of the different types of pension plan and its implications on the financial performance of the company.

AMAZON’s company contributes to several multi employer pension plans based on obligations emerging from collective bargaining agreements. AMAZON’s company has the defined benefit plans, which helps in accounting for the future pension income of the employees. The company uses this plan as it makes it easy to obtain the obligation and expenses associate with the company’s pension plans and other post retirement benefits. The company also accounts for the defined benefit plans, which aims at protecting the interest of the employees in future.

The contributions to the defined benefit plans have significant negative effect the company’s financial statements. For instance, the contributions made to the plans reduces the amount of money which could be transferred to the retained earnings and thus, reducing the overall equity in the company. Additionally, the contributions are costly to the company as it very lowers the total assets within the company.

Alternative pension plan

Who would possibly want to pay money to a bank if they weren't allowed to touch their cash for 30 years; had no certainty that it would be worth more than when it was put in; were not allowed to do what they wanted with it when they did get it; and were not 100% convinced the bank would look after the money in the best way possible? Switch the bank for a pension fund manager and you have a few key reasons why some people will never invest in a pension. The recent stock market falls and drops in annuity income have simply been the final straw.