Lecture 23 Pension Plan FundingPension Plan Funding InstrumentsPension Plan Funding Instruments - (cont.)Actuarial Cost MethodsActuarial AssumptionsSummaryLecture 23Pension Plan Funding•Pension Plan Funding Instruments•Actuarial Cost Methods•Actuarial AssumptionsPension Plan Funding Instruments•Trusts–Grantor - employer–Trustee - party holding funds –Beneficiaries - employees–Fiduciary responsibilitiesPension Plan Funding Instruments - (cont.)•Insurance Contracts–Allocated•Individual life insurance or annuity contracts•Group permanent life insurance contracts•Group deferred annuity contracts–Unallocated•Group deposit administration contracts•Immediate participation guarantee contracts–Separate accounts funding–New money creditingActuarial Cost Methods•Accrued benefit•Projected benefit•Past Service Cost•Individual level-premiums method•Entry-age normal•Aggregate•Attained-age normal•Frozen initial liabilityActuarial Assumptions•Interest rate•Mortality•Turnover•Salary scale•Retirement•Disability•InflationSummary•Pension funding requirements are complex•Significant choice in methods used to value pension plan funding needs•Employer needs to select the actuarial method and assumptions that best meet the objectives of the
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