In such cases, the rounding technique should be unbiased. 35. We believe, however, that it may be acceptable for employers to consider probable changes in the portfolio mix (e.g., to bring it back in line with the target mix or to align with a new target mix), provided the changes will occur in a reasonable period of time and have been approved by the appropriate level of management. Indeed, assumed long-term rates of return are approximately 30 basis points higher for firms that are acquiring other firms. Please seewww.pwc.com/structurefor further details. the investment return assumption that would apply to each of the State's pension plans. In some circumstances, this may be accomplished by adjusting the base amount from which future compensation elements are projected (for example, the projected bonuses might be based on an adjusted average of bonuses over the last 3 years). Alternatively, the cap may be defined on an individual participant basis. e. U.S. Social Security Administration. The findings of the study are important in part because they draw attention to possible linkages between the quality of financial information that is reported about the financial condition of public pension funds . Section 1.2, Scope, was expanded to clarify the application of the standard when an economic assumption is not selected by the actuary and whenever the actuary has an obligation to assess the reasonableness of an economic assumption that the actuary has not selected. The ASB voted in June 2020 to adopt this standard. Summarized here are the significant issues and questions contained in the comment letters and the responses to each. Under ASC 715, the expected rate of return on assets is a component of the employee benefit cost. <>/Font<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> <> For each previously selected assumption that the actuary determines is no longer reasonable, the actuary should select a reasonable new assumption. Select and ultimate inflation rates vary by period from the measurement date (for example, inflation of x% for the first 5 years following the measurement date and y% thereafter). c. historical and current investment data including, but not limited to, real and nominal returns, the inflation and inflation risk components implicit in the yield of inflation-protected securities, dividend yields, earnings yields, and real estate capitalization rates. If these rates were lowered by 1-2 percentage points, the required pension contributions taken from salaries or via taxation would increase dramatically. 41 for communication and disclosure requirements regarding changes in circumstances known to the actuary that occur after the measurement date and that would affect economic assumptions selected as of the measurement date. Companies must also disclose other economic assumptions: the expected rate of return on plan assets, the expected rate of salary increases, As with other actuarial assumptions, projecting public pension fund investment returns requires a focus on the long-term. Low return (5 per cent) pension projection = a poor retirement income. The items listed above, as well as other market observations or prices, include estimates of future experience as well as other considerations. Pension obligation values incorporate assumptions about pension payment commencement, duration, and amount. For situations in which both the demographic assumptions and economic assumptions have changed from those previously used for the same type of measurement, the actuary may disclose the general effects of the changes separately or combined, as appropriate.
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