Description: This paper examines tandem levels of salary and interest rates and finds that the absolute level of each assumption as well as the differential are significant cost determinants for defined benefit pension plans. In forming best-estimate salary and interest rate assumptions, the actuary must reconcile the difference, if any, between the currently observed rates and the valuation assumptions. Common practice is to choose expected long-term rather than observed rates for valuation purposes. The error in this procedure is analyzed and found to be tolerable for strictly temporary discrepancies between observed rates and valuation assumptions. For situations where these discrepancies are expected to persist for some time, a need is shown for nonuniform, calendar-year assumptions or their equivalent in order to develop best-estimate assumptions. Followed by several discussion papers submitted

Description: This paper develops a family of accrued benefit actuarial cost methods which permits the purchase of retirement income at either an accelerating or decelerating rate. From Transactions of Society of Actuaries 1967, Vol. 19, Pt. 1, No. 54.

Description: Traditional pension cost methods are based on the actuarial present value of future benefits [which is a mean value]. As a consequence, these cost methods are deficient because they cannot provide plan sponsors with certain valuable information such as the probability that the accumulation of a particular sequence of contributions will ultimately provide sufficient funds to pay benefits, or the size of fund needed to ensure that retirees' lifetime benefits are paid with a specified probability. In response to these deficiencies, a new family of cost methods, called a-percentile cost methods, is developed. These cost methods are based on the probability of adequately covering all participants' benefits. Expressions for the normal cost, the accrued liability and the gain are provided. From Transactions of Society of Actuaries 1993, Vol. 45.

Description: The primary purpose of this paper is to set forth one method of evaluating vested pension costs and to suggest a simple way for the actuary to make provision in his pension cost calculations for specific vesting schedules. From Transactions of Society of Actuaries 1966, Vol. 18, Pt. 1, No. 52.

Description: This is a discussion of 'The Generalized Family of Aggregate Actuarial Cost Methods for Pension Funding' by John R. Taylor. From Transactions of Society of Actuaries 1967, Vol. 19, Pt. 1, No. 54.

Description: A new approach to computing annual pension costs, based on an open-group projection of the participant population for a number of years, was described in detail in a paper published in the 1975 Transactions, entitled 'The Forecast Valuation Method for Pension Plans.' That paper described the operation of such a cost method at the initial valuation date. This paper discusses several alternative approaches to projection valuation methods and also describes how costs should be computed at valuation dates after the first one. In addition, the author illustrates projected contributions and asset buildups under both traditional [closed-group] cost methods and projected [open-group] cost methods, for a number of years under a variety of assumptions as to the growth rate of the participant group. Projection valuation methods have not been described heretofore in sufficient detail to make it possible for actuaries to use them on a recurring basis or for the Internal Revenue Service to make a determination as to the acceptability of such approaches for computing tax-deductible pension plan contributions. It is the hope of the author that this paper will fill both of those gaps. From Transactions of Society of Actuaries 1977, Vol. 29.

Description: In this paper, a general model for a pension plan involving growth with respect to the population, salaries, and retirement benefits is used to study contribution patterns that may arise under different actuarial cost methods. Detailed results are presented for the case where the growth of population and the growth of salaries are described by exponential functions. Economic implications are presented and discussed. From Transactions of Society of Actuaries 1979, Vol. 31.

Description: This paper deals with the selection of appropriate interest and inflation assumptions, which is one of the most important considerations in the valuation of a defined benefit pension plan. The paper begins by describing a simplified model in which the only important consideration is the selection of an appropriate differential between interest and inflation assumptions. The discussion then considers some situations that might lead the actuary to attempt to select a realistic level of interest and inflation assumptions, in addition to an appropriate differential. The author's conclusion is that in some situations the absolute level of the interest and inflation assumptions can be all but meaningless, and the differential between the two assumptions is the important factor. In other situations the use of this technique will produce serious inaccuracies in the valuation results. As always, the actuary must analyze each situation in order to determine which of the available techniques will produce the best results with the least effort, given the degree of accuracy required. From Transactions of Society of Actuaries 1976, Vol. 28.

Description: This paper surveys the actuarial techniques connected with salary scale mathematics for the valuation of defined benefit pension plans. Followed by several discussion papers submitted

Description: Among many purposes, this paper will outline the theory of gain and loss analysis for pension fund valuations, indicate practical problems met in applying the theory to two model plans and show the Fackler accumulation formulas. From Transactions of Society of Actuaries 1959, Vol. 11, No. 31.