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ASOP4 - measuring pension obligation and cost QBS # 12 (Communication to…
ASOP4 - measuring pension obligation and cost
QBS # 12
1)Measurement purpose
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5) Other info from principle
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9)Actuarial cost method :check:
10) cost allocation procedures
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Considerations
1) Timing and duration of benefit payments
2) Frequency and nature of plan amendements
3) Desire for stable costs or contributions
4) Desire to acheive funding target level within a period of time
5) Having adequate assets to pay benefits
Critère
Attribution period should be related to:
1) plans formula
2) ppt sal
3) ppt svc
Should reflect expenses
1) implicit
2) explicit
Attribution period
1) Min DOH
2) Max expected retirement
AAL + PVNC = PVFB + PVEXP
2) Measurement date
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2) events after measurement date (optional)
3) adjustment of prior measurement vs new measurement date
1) changes to number of ppts
2) changes to demo caracteristics
3) differenece betwee expected vs actual : cot / ben / rdm / expenses
4) Lenght of time since last measurement
5) Changes in economic and demo expectations
1) Info as of deferent dates :
a) adjust info,
b) adjust the prior measurement
Communication to include
d) Caveat that future results may differ from assumed
e) methods
1) Roll forward techniques
2) actuarial cost methods /attribution period
3) Accounting/contribution calc
4) client policies
5) changes in methods rational
7) Asset allocation methods
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c) Comment on results
1)
assessment on funded status
a) can assets cover settlement costs
b) future contributions
c) MVA funded status vs AVA funded status
2)
cost method ability to accumulate enough assets
3)
Contribution allocation and FP impact on expected contributions and funded status
f) 6)Assumptions
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1)
Analysis/source
2)
Developement method
3)
Rational
4)
wether any default risk was reflected
5)
Rely on others
6)
prescribed by others
7)
changes of assumptions/rational
b) Data/asset summaries :check:
g) 3) Applicable plan provisions :check:
1) Changes to plan provisions
2)
12)Administrative inconsistencies
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(unresolved)
adopted before measurement dates :
reflection required
adopted after
reflection optional
a) Purpose of measurement/data - post event adjustements
11)Refinement vs materiality
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12) Administrative inconsistencies
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Techniques when difficult to measure with traditional :
1) Stochastic modeling
2) Option-pricing techniques
3) Deterministic assumptions to estimate impacts
1) Observation inherent market data
2) Benefits earned up to measurement date
3) benefit default risk/financial health of ER
8) Market-consistent PV:
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