Canadian Institute of Financial Planning (CIFP) Practice Exam 2025 - Free Financial Planning Practice Questions and Study Guide

To determine George's annual pension entitlement after 30 years of service, it is essential to consider how pension plans typically calculate benefits based on years of service, final average salary, and other factors relevant to the specific pension plan he is enrolled in.

If George's pension plan follows a common formula where the benefit is based on a percentage of his final average salary multiplied by his years of service, it is likely that the resulting calculation leads to $7,200 as his annual pension entitlement. This could imply that the percentage used in the formula, combined with George’s salary and years of service, aligns with this value.

In contrast, other figures such as $6,000, $8,400, and $5,600 represent different calculations or assumptions about George's earnings, years of service, or the specific formula used by the pension plan might not be applicable to his situation. The correct amount reflects a precise application of the pension benefit formula specific to George's contributions and circumstances. Understanding how pension benefits are calculated can illuminate why $7,200 is the accurate pension entitlement for him after 30 years of service.