Eight comment letters were received and considered in making changes that are reflected in this revised ASOP. The Actuarial Standards Board (ASB) sets standards for appropriate actuarial practice in the United States through the development and promulgation of Actuarial Standards of Practice (ASOPs). 2020 Global Survey of Accounting Assumptions for Defined Benefit - WTW The employer communicates its intent to raise the dollar-denominated amount (i.e., the cap) in the future (e.g., to keep pace with inflation), or. 41, Actuarial Communications, an assumption may be selected by the actuary or selected by another party. Notable changes made to the second exposure draft are summarized below. It is used in conjunction with the market-related value of plan assets (see. Actuarial Assumptions - MERS | Municipal Employees - MERS) of Mich The rates of change in an individuals compensation attributable to personal performance, promotion, seniority, or other individual factors. If the actuary is using an approach that treats inflation as an explicit component of other economic assumptions or as an independent assumption, the actuary should follow the general process set forth in section 3.3 to select an inflation assumption. Actuarial Standards Board (1996) states that "generally, the appropriate discount rate is the same as . Summary of Notable Changes from the Existing ASOP No. Actuaries can still set other economic assumptions, such as compensation increases, inflation, or fixed income yields. JULY 15, 2020. If high-quality corporate bonds available in the marketplace are trading at negative yields (i.e., their present value is greater than their nominal future cash flows), an employer would need to purchase an amount of bonds that exceeds the notional undiscounted future benefit payments to generate a stream of future cash flows to pay the benefits when due. If the actuary takes into account the investment policy in selecting an investment return assumption, the actuary should consider reflecting whether the current investment policy is expected to change during the measurement period. Only in those years in which the cap is not expected to be reached would the employer's obligation need to be calculated by making projections of future per capita health care costs. The objective when selecting assumed discount rates for purposes of measuring a plans benefit obligations is to determine the single amount that, if invested at the measurement date in a portfolio of high-quality corporate debt instruments, would provide the necessary future cash flows to pay the benefits when due. The decade also saw the emergence of a financial economic viewpoint on pension obligations. If an economic assumption is being phased in over a period that includes multiple measurement dates, the actuary should determine the reasonableness of the economic assumption and its consistency with other assumptions as of the measurement date at which it is applied, without regard to changes to the assumption planned for future measurement dates.
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