Description: Exploration of sources of volatility in retiree health valuations, noting how volatility arises and might be mitigated, with discussion of valuation parameters more problematic for retiree health benefits than for pensions. Three significant influences on retiree health valuation volatility are covered-- changes in benefit level, fluctuations in cost level, and alterations in eligibility for, or duration of, benefit – and attention focused on the last two. Specific conclusions result in recommendations, which are supported by practical examples contrasting volatile measurement results with those likely from the recommended practices. Theoretical discussion includes health claim variation, health trend usage, financial economics, option pricing, discount rates, and deterministic vs. stochastic modeling.

Description: The motivation for various asset valuation methods and their properties are briefly described. Some smoothed value or market-related methods based on arithmetic averaging and exponential smoothing are considered and their effect on funding is discussed. Suggestions for further research are also made.

Description: This presentation of the panel discussion from the 1977 Record of the SOA Vol. 3 No. 4 examines pension valuation and assumptions particularly assumption setting for Social Security Benefits, assumptions and methods for smaller plans, early retirement assumptions and funding of supplementary benefits, gain/loss and valuation assumptions.

Description: Panelists develop a framework for analyzing the diverse family of deferred recognition methods for assets under a pension plan. Using this framework, attendees learn how to assess the reasonableness of a method from both a client and a regulatory perspective – that qualify under IR Code Section 412[c][2][A] – including a case study of the evolution of smoothing methods used by a particular group of plan sponsors. From the 2002 Record of Society of Actuaries, Volume 28, No. 2. Session 76PD of the San Francisco Spring Meeting.

Description: This article describes a simplified problem in pension plan financing and presents two questions about how it can be modeled. Answers to these questions will be discussed and their implications for traditional actuarial models will be presented in Part 2 of the article in the following issue of the newsletter.

Description: This paper examines the valuation of assets and poses the following questions: A. What bases, other than cost or market, are in use for valuing pension trust assets and acceptable under the Internal Revenue Code and Rulings? and B. How can a retirement plan having assets valued on a book or cost basis utilize existing unrealized appreciation for purposes of improving benefits or reducing current funding costs without changing to a market value basis? From Transactions of Society of Actuaries 1961, Vol. 13, Pt. 2.

Description: Spending down (decumulating) assets during retirement involves complex decisions about which specific assets to liquidate in what amounts, in what order, and at what times. No established methodology exists for making these decisions in individual cases. This paper describes a manual process that individuals can follow, a process that could be automated for wider use.

Description: Actuaries may soon be required to select assumptions that are individually reasonable when measuring pension obligations. This is the core meaning of a proposed amendment to the Actuarial Standard of Practice #4 in addition to the proposed ASOP on economic assumptions.

Description: Paper that discusses a new funding method that would make the recommended contribution for funding purposes for public DB plans subject to an overriding minimum contribution OMC calculation.

Description: Discussion of competing theories for valuing public pension liabilities. Emphasis on revised Actuarial Standards of Practice that focus on the purpose of the measurement.