Dollar value of a pension plan’s assets and liabilities as determined by the actuary. The value is based on statistical probability. It is used to establish if the assets are adequate to fund the plan’s liabilities. If not, the plan sponsor must increase its contributions to make up the deficiency. If the assets are more than necessary, the plan sponsor can reduce contributions. Also called plan valuation.
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Investigation by an actuary, usually every three years, to ascertain the ability of a defined pension scheme to meet its liabilities. This means assessing the level of funding required and recommending a contribution rate based on a comparison of the actuarial value of assets and the actuarial liability. Actuaries also carry out annual valuations of the liabilities of life insurance companies.