Department of Finance

 

Date of this Version

1996

Document Type

Article

Citation

Journal of Actuarial Practice 4 (1996), pp. 257-274

Comments

Copyright 1996 Absalom Press

Abstract

We discuss the extent of the actuary's freedom in choosing the funding method for defined benefit pension plans. In particular, we look at funding through a combination of normal costs, amortization of an unfunded liabilities, and fund of assets. The IRS constraint on "reasonable funding methods" is considered, with particular mention of the aggregate entry age normal method. In addition, an algebraic development is performed of year-to-year changes in the status of a plan's funding.

Share

COinS