Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Pension - Social Security
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

Meet Lindsey Nelson, Manager at DW Simpson

Reply
 
Thread Tools Display Modes
  #1  
Old 11-14-2001, 11:02 AM
Anonymous
Guest
 
Posts: n/a
Default

I have a question concerning the calculation of the ABO used in determining the additional minimum liability for FAS 87 purposes. Is the ABO simply the PBO without future salary increases or is meant to reflect the obligation the Er would have if the plan were terminated - in Canada certain provinces provide members with grow-in rights when a plan is terminated which are reflected in the calulation of the wind up liability. The inclusion of these rights could lead to an ABO significantly higher than just ignoring future salary increases.
Reply With Quote
  #2  
Old 11-27-2001, 09:39 AM
wheat66 wheat66 is offline
Member
 
Join Date: Sep 2001
Posts: 272
Default

When I calculate the ABO, I use the Accrued Benefit. I still do the usual ancillary valuations I did in the PBO calcs. I project future service solely for the purpose of eligibility for future early retirement benefits, but still only reflecting the Accrued Benefit. I think this reflects the "grow in" rights you mentioned? I suspect we're concerned mostly with subsidized early retirement bens here; could be some other weird subsidized bens to consider, I suppose.

I think USA rules also require protection of grow in rights upon plan termination (there is an old 1984ish Rev. Ruling about it, I recall).

I've never worked with a plan that had Unpredictable Contingent Event Liabs (right term?) so I don't know about them.

Paragraph 18 of FAS87 does seem to describe a plan termination liability, but I'd bet most actuaries don't do a true plan termination ABO. For example, what if a plan termination would mean immediate cash-out offers for all participants? Would you calculate the ABO reflecting GATT rates pre- and post-ret? I suspect no ones does that. Could lead to large "Charges to Equity"?
Reply With Quote
  #3  
Old 01-16-2002, 07:31 PM
Anonymous
Guest
 
Posts: n/a
Default

It should be simply PBO without future salary increases.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 08:14 AM.


Powered by vBulletin®
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.25830 seconds with 7 queries