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#1
03-28-2017, 09:42 PM
 EK56 SOA Join Date: Feb 2013 Posts: 10
Actuarial Cost Methods

Hello,

a short question about names : Is the "Projected Benefit Cost Method" just another name for "Projected Unit Credit Cost Method"(PUC) ?

Gracias y Saludos,

Ralf
#2
03-29-2017, 10:12 AM
 Kenny Member Non-Actuary Join Date: Jan 2003 Posts: 8,105

Probably, but can you provide some context?
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#3
03-29-2017, 10:34 AM
 EK56 SOA Join Date: Feb 2013 Posts: 10

Dear Friends, dear Kenny, I am studying "Pension Mathematics with Numerical Illustrations" by Winklevoss (ProVal is from his company). It's a very old edition. He discusses there "Accrued Benefit Cost Method", what's a different name for the UC method, and "Projected Benefit Cost Method". Here the NC remain constant, either as dollar amount or as a percentage of salary, throughout the individuals period of credited service, provided there are no benefit increases or other plan revisions.

Saludos

Ralf
#4
03-29-2017, 12:43 PM
 Dan Moore Member SOA AAA Join Date: Jan 2008 College: University of Dallas Posts: 2,513 Blog Entries: 1

Sounds like 'Projected Benefit Cost Method' is the same as 'Entry Age Normal Cost Method'. Under this method, the normal cost remains the same every year (or increases with salary) if actuarial assumptions are met and the projected benefit never changes.

Under Projected Unit Credit, the normal cost increases with interest every year (under the same assumptions as above).
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#5
03-29-2017, 12:55 PM
 JMO Carol Marler Non-Actuary Join Date: Sep 2001 Location: Back home again in Indiana Studying for Nothing actuarial. Posts: 37,643

I agree with Dan. For what that's worth. Haven't done pensions for decades.
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 Tags actuarial cost method, pension, puc