Description: This paper examines tandem levels of salary and interest rates and finds that the absolute level of each assumption as well as the differential are significant cost determinants for defined benefit pension plans. In forming best-estimate salary and interest rate assumptions, the actuary must reconcile the difference, if any, between the currently observed rates and the valuation assumptions. Common practice is to choose expected long-term rather than observed rates for valuation purposes. The error in this procedure is analyzed and found to be tolerable for strictly temporary discrepancies between observed rates and valuation assumptions. For situations where these discrepancies are expected to persist for some time, a need is shown for nonuniform, calendar-year assumptions or their equivalent in order to develop best-estimate assumptions. Followed by several discussion papers submitted

Description: This is a report of the Society of Actuaries Committee on Pensions that was initially undertaken as an effort to assist the Committee on Actuarial Principles and Practices in Connection with Pension Plans of the American Academy of Actuaries with respect to recommendations it had been preparing. This report was prepared in an effort to promote better understanding of pension terminology. The Committee anticipates that additional work will be needed to coordinate this effort with regulatory efforts prompted by the pension reform act. It is hoped that a further list of terms reflecting specific words used in ERISA can be prepared, with pertinent definitions along with references to clarifying expressions suggested by the Committee where appropriate. From Transactions of Society of Actuaries 1976, Vol. 28.

Description: This is a discussion about the Opinion No. 8 Bulletin on accounting for the cost of pension plans that was recently issued by the Accounting Principles Board of the American Institute of Certified Public Accountants and Bulletin No. 21 recently issued by the Committee on Accounting and Auditing Research of the Canadian Institute of Chartered Accountants, and the effect these bulletins will have on the preparation of actuarial valuations of pension plans. Also discussed is the use of level-premium life insurance in connection with employee benefit plans and the underwriting, actuarial and other problems encountered in the design and marketing of such plans. From Transactions of Society of Actuaries 1967, Vol. 19 Pt. 2, No. 54.