pension modes except U.S. qualified

Under the attained age level percent of salary actuarial cost method, the accrued liability is determined under the projected unit credit cost method. However, the normal cost is determined for each participant individually, by spreading the present value of future normal costs over the present value of future salaries, as illustrated in the following formula:

 

where:

• PVB is the present value of the participant’s future benefits,
• PUC is the accrued liability for the participant under the projected unit credit method,
• PVFSal is the present value of the participant’s future salaries,
• Salary is the valuation salary for the year beginning on the valuation date, and
• n is the number of active plan participants under 100% retirement age on the valuation date.

If the plan has current employee contributions (i.e., the “eec” Contingency is selected for an included Benefit Definition), ProVal derives the employer normal cost by subtracting from the total normal cost (calculated as indicated above) an “employee contribution normal cost” equal to the expected employee contributions for the year beginning on the valuation date, calculated according to the “PUC / UC” methodology described in the Technical Reference article entitled Employee contribution methodology).

To compute employer contributions using the Attained Age – Level % of Salary cost method, first turn on the Attained Age – Level % of Salary liability calculations in the funding Valuation Assumptions (see Liability Methods - Funding) and run the Valuation or Core Projection. Then select the Attained Age, % of Salary cost method in your Asset & Funding Policy (under the Contribution Policy topic) and run a Valuation Set, Deterministic Forecast or Stochastic Forecast.

For details regarding the calculation of the liability under the projected unit credit cost method, see the Technical Reference article entitled PUC and UC Attribution.

There are two aggregate actuarial cost methods related to this individual attained age method that are also available under the Contribution Policy topic of the Asset & Funding Policy: the Aggregate Attained Age – Level % of Salary method and the Aggregate Attained Age – Level $ method. Under each of these aggregate methods, the actuarial liability is the actuarial liability computed under the Projected Unit Credit (PUC) cost method and the present value of future normal costs (PVFNC) is defined as the excess of the Present Value of Future Benefits over the (PUC) accrued liability. The normal cost for the Aggregate Attained Age – Level % of Salary method is this PVFNC divided by the total present value of future salaries for active plan participants and then multiplied by the total valuation salary. The normal cost for the Aggregate Attained Age – Level $ method is this PVFNC divided by the total present value of future working lifetimes and then multiplied by the total valuation number of active plan participants.