The standard contribution rate and actuarial liability, Financial Management

Assignment Help:

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?


Related Discussions:- The standard contribution rate and actuarial liability

Speculating on future exchange rate movements, There is some discussion on ...

There is some discussion on whether Multinational Corporations (MNC's) enhance risk when borrowing foreign currencies. Those in favor of borrowing state that lower costs of financi

What are the internal audits, What are the Internal audits Internal au...

What are the Internal audits Internal audit is seen as independent from management who are devising and implementing internal controls and must be able to provide advice on in

Receipt of bids and bid opening, R eceipt of bids and bid opening We d...

R eceipt of bids and bid opening We discussed how to prepare the bids and to publish them in the earlier sub section. Now let us see how to receive and open bids. To receiv

A/a2, A/A2 is generally the second- or third-highest rating that a rating a...

A/A2 is generally the second- or third-highest rating that a rating agency gives to a security or carrier. This rating indicates that there is a comparatively low risk of default a

Collar, Collar A collar can be established by holding a share, along w...

Collar A collar can be established by holding a share, along with purchasing a protective put and writing a covered call, where both options at out-of-money.. For Example

What is bid, Bid The price buyers provide to acquire securities or pri...

Bid The price buyers provide to acquire securities or privacy from sellers.

Explain that many u.s. firms simply do not hedge, Recent surveys of corpora...

Recent surveys of corporate exchange risk management practices point out that many U.S. firms simply do not hedge. How would you explain this result? Answer:  There can be severa

Discount rate determinants, Discount Rate Determinants The discount rat...

Discount Rate Determinants The discount rate is the firm weighted average cost of capital. It represents the opportunity cost of investing creditors and shareholders funds in o

Explain savings and loan associations, Savings and loan associations Hi...

Savings and loan associations Historically savings along with loan associations (S&Ls) and thrift institutions have concentrated mostly on residential mortgages by acquiring fu

Define discounting the cash flows in the apv model, What is the intuition o...

What is the intuition of discounting the several cash flows in the APV model at fixed discount rates? The APV model is a value-additivity method where total value is defined by t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd