32, Social Insurance (unless ASOPs on social insurance explicitly call for application of this standard). 8#i) RJM0i/-I oYqOTr;9iprU=&?~UOLXRgGG1IcvL!:s(nT.uJH5X#QG jo(DJ The actuary should select assumptions (both demographic assumptions selected in accordance with ASOP No. e. U.S. Social Security Administration. On an annual basis, at minimum, the board shall establish an interest rate assumption upon which the provisions of subsequent supplemental pension contracts shall be based. Selection of Economic Assumptions for Measuring Pension Obligations The Chair also reminded the Board that the actuary performs an experience study every five years, so this issue will be revisited. If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. Given the availability of other yield curve and bond-matching approaches, use of a benchmark approach to develop discount rates is increasingly uncommon. 41, section 4.3, if the actuary states reliance on other sources and thereby disclaims responsibility for any material assumption or method set by a party other than the actuary; and. The actuary may advise the plan sponsor about the selection of the discount rate. Pensions crisis - Wikipedia Judgment should be applied to determine whether a planned change is probable. In some other circumstances, an additional assumption regarding an expected increase in pay in the final year of service may be used. Depending on a particular measurements circumstances, the actuary may disclose information about specific interrelationships among the assumptions (for example, investment return: x% per year, net of investment expenses and including inflation at y%). The actuary may want to adjust estimates based on observations to reflect the various risk premiums and other factors (such as supply and demand for tradable bond or debt securities) that might be reflected in market pricing. DiNapoli: State Pension Fund Posts 9.5% Annual Investment Return Alternatively, the actuary may be in an advisory position, helping the legislative body, plan sponsor, or governing board of trustees select the assumptions. the Investment Return Assumption Key Points The expected investment return for a pension plan's assets is used as the discount rate for public and multiemployer pension plan valuations and is sometimes referred to as the "actuarial" rate of return. These assumptions include the discount rate and estimate of future salary and benefits levels. Estimating the projection horizons for the expected returns. One approach to setting the payroll growth assumption may be to reduce the compensation increase assumption by the effect of any assumed merit increases. PDF Employees' Retirement System of The County of Milwaukee Minutes of The This might be the case when the employer has changed actuarial firms and the previously used spot-rate yield curve is no longer available, or the employer's actuary or an outside vendor develops a new curve that produces a discount rate that the client believes more appropriately reflects the characteristics of its benefit obligation. If an economic assumption is being phased in over a period that includes multiple measurement dates, the actuary should determine the reasonableness of the economic assumption and its consistency with other assumptions as of the measurement date at which it is applied, without regard to changes to the assumption planned for future measurement dates.
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