SOA Enrolled Actuaries EA-1 Examination Practice Test
EA-1 practice centers on actuarial measurement of defined benefit pension plans. The available questions use scenarios involving benefit formulas, credited service, vesting, plan contributions, and accrued obligations. They also touch on annuity settlements, asset comparisons, and how demographic experience—such as participant longevity—can affect pension liabilities.
Exam overview
About the SOA Enrolled Actuaries EA-1 Examination Exam
Pension valuation requires separating a plan sponsor’s contributions from the benefits the plan owes participants. Questions may ask you to distinguish career-average compensation from final-average-pay formulas, identify how service affects a benefit, or determine what vesting means when employment ends before retirement. Other scenarios involve interpreting a purchase of annuities as a settlement of benefits and comparing plan assets with accrued obligations at a valuation date. Actuarial judgment also matters when experience differs from assumptions: longer lifetimes can increase the measured cost of lifetime annuities, while changed retirement patterns may prompt review of demographic assumptions. A year-to-year valuation comparison is more useful when it explains the sources of change rather than presenting only two totals. Practice connecting each stated plan feature or experience finding to its effect on benefits, assumptions, or measured liabilities.
Sample Practice Questions
Review a selection from this exam's published US Practice Tests practice bank.
A plan sponsor contributes an amount to a pension trust. Which statement best describes the relationship between that contribution and the plan’s benefit obligation?
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Correct answer: BA contribution generally adds to plan assets. Unless plan terms are separately amended, making a contribution does not alter the benefits promised under the plan.
A defined benefit pension plan calculates a participant’s retirement benefit using a percentage of final average pay for each year of credited service. Which benefit formula feature most directly causes the benefit to increase as the participant completes additional service?
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Correct answer: BIn a formula based on a percentage of pay multiplied by years of service, the service multiplier causes the calculated benefit to grow as additional credited service is earned. Vesting determines whether a benefit is nonforfeitable; it does not itself calculate the amount.
A participant leaves employment before retirement. Under a defined benefit plan, vesting rules primarily determine which of the following?
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Correct answer: AVesting rules establish when a participant’s right to a benefit becomes nonforfeitable, subject to the plan terms and applicable law. Vesting is separate from actuarial valuation assumptions, investment policy, and filing administration.
A plan uses an annuity purchase to settle benefits for a group of participants. What does the purchase generally accomplish for those benefits?
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Correct answer: AAn annuity purchase generally provides for an insurer to make specified payments under the annuity contract, subject to its terms. It does not itself change service records or the plan’s overall benefit formula.
A plan has a benefit formula that uses a participant’s career-average compensation. Which feature most directly distinguishes this design from a final-average-pay formula?
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Correct answer: AA career-average design generally bases benefits on compensation over many or all years of covered service, rather than focusing on compensation near retirement. The exact calculation depends on the plan terms.
A plan provides a fixed monthly pension beginning at retirement. Which event would most directly increase the participant’s projected benefit if the formula grants a fixed amount for each credited year of service?
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Correct answer: AUnder a fixed-per-year-of-service formula, additional credited service adds another unit of benefit under the formula. Investment assumptions and asset allocation do not directly change the formula amount.
A pension plan has a defined benefit obligation measured using a set of demographic and economic assumptions. An experience study indicates that actual retirement patterns differ from those assumptions. What is the most appropriate general actuarial response?
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Correct answer: AAn experience study is evidence for evaluating assumptions, not a command to change the plan or to treat one year as a reliable long-term forecast. The actuary considers the credibility and relevance of experience along with other information when assessing assumptions.
How to use this practice test
The free practice session presents up to 20 randomly selected questions from the 50-question EA-1 bank. Work each pension scenario by identifying the benefit or valuation concept at issue, then review the session results to locate topics that need more attention.
Preparation tips
- For each benefit-formula question, identify whether compensation is career-average or final-average and how credited service enters the calculation.
- Separate a sponsor contribution, a participant’s accrued benefit, and the plan’s measured obligation; they describe different pension quantities.
- When a participant leaves employment, distinguish vesting of earned benefits from the timing or form of benefit payment.
- For assumption questions, trace the direction of the effect: longer expected lifetimes generally increase liabilities for lifetime annuity benefits, all else equal.
- When comparing valuation years, organize changes by possible sources such as experience, assumptions, benefit changes, and asset values.