The standard contribution rate and actuarial liability, Financial Management

Question 1:

Give the formulae for the Standard Contribution Rate (SCR) and Actuarial Liability (AL) for each of the following funding methods:

a) Credit Unit Method

b) Projected Unit Credit Method

c) Entry Age Method

d) Attained Age Method

Question 2:

Tylon Plc has been running a non-contributory Defined Benefit scheme for the last 20 years. Employees must complete a probatory period of 6 months to join the scheme. It provides a pension benefit of 2% per year of service (since joining company) based on final salary at retirement. The pension is indexed by CPI while in deferment and in payment. Pensioners can commute 30% of their annual pension for a lump sum at a commutation rate of 13 (current annuity rates at retirement are 10). Death in service benefits are 48 times the salary at the time of death. Leaver benefits are computed on a Defined Contribution approach based on the contributions paid by the company every year. Employees of Tylon also enjoy a State Pension which is contributory for both employer and employee.

Tylon Plc is currently going through tough economic times. Its pension scheme is now in a deficit position. Its HR manager has requested your advice on areas of the scheme/benefit design which can be amended for new employees.

a) Outline the points to be made to the HR manager and how your proposed actions will help reduce cost.

b) What are the issues you anticipate if the HR manager is to apply the new scheme/benefit design to existing employees and pensioners?

Posted Date: 12/4/2013 2:22:54 AM | Location : United States







Related Discussions:- The standard contribution rate and actuarial liability, Assignment Help, Ask Question on The standard contribution rate and actuarial liability, Get Answer, Expert's Help, The standard contribution rate and actuarial liability Discussions

Write discussion on The standard contribution rate and actuarial liability
Your posts are moderated
Related Questions
Discuss the process of bringing a new international bond issue to market. Answer:  A borrower desiring to increase funds by issuing Eurobonds to the investing public will conta

explain participating budgeting and slow budgeting.

What are the factors of debt securities A legal agreement, known as a trust deed, is drawn between security holders and company issuing the debt securities. Every security issu

QUESTION An audit team is currently engaged in planning the audit of the financial statements of E Limited as at 30 June 2007. This was the first accounting period during which

What is risk aversion? If common stockholders are risk averse, how do you explain the fact that they often invest in very risky companies? Risk aversion is the trend to avoid add

Q. Degree of uncertainty in predicting cash balances? Probability approaches identify a degree of uncertainty in predicting cash balances and allow for a range of outcomes to

Q. Define Arbitrage Process ? The basic theory of the MM approach if we ignore the taxes is that the total value of a firm should be constant irrespective of the degree of leve

Under what circumstances is a warrant's value high ?  Explain. A warrant's value would be elevated when the stock price, time to expiration, and/or expected stock price volatil

X & Y is desirous to purchase a business and has consulted you, and one point on which you are asked to advice them, is the average amount of working capital which will be required

Trial Balances: If the trial balance does not result in a "0", the various records will need to be reviewed to pinpoint the spot where the unbalance occurred and any necessary