The extra pension granted to a pension scheme member who has deferred his pension beyond normal retirement age.
Insurance Encyclopedia
Actuarial liability
The amount, using actuarial assumptions and methods, a pension scheme will have to pay out as pension benefits and expenses after the date of the actuarial valuation. It includes the present value of instalments of pensions in payment and related contingency benefits, the present value of future payments in respect of deferred pensioners and a provision for all active members.
Actuarial rates
One-half the expected monthly cost of the supplemental medical insurance (SMI) program for each aged enrollee (for the aged actuarial rate) and one-half the expected monthly cost for each disabled enrollee (for the disabled actuarial rate) for the duration the rate is in effect.
Actuarial reduction
The reduction in a pension scheme member’s accrued pension benefits because he has retired early. The reduction helps to cover the additional costs brought about by early retirement.
Actuarial report
A report in the format required by the FSA on an actuarial valuation. The name is also used when an actuary reports how changes to a pension scheme might affect it financially.
Actuarial soundness
1. Measure of the adequacy of hospital insurance and supplementary medical insurance (SMI) financing as determined by the difference between trust fund assets and liabilities for specified periods. 2. A pension fund is considered to be actuarially sound when the amount of money in the fund and the current level of contributions to the fund are sufficient to meet the liabilities that have accrued and are accruing on a current basis.
Actuarial statement
Statement required by the Disclosure Regulations to be included in the annual report. It must show, in the prescribed form, the security of the accrued and prospective rights of pension scheme members and be signed by an actuary. See DISCLOSURE 1.
Actuarial status
Measure of the adequacy of the financing as determined by the difference between assets and liabilities at the end of the periods for which financing was established.
Actuarial surplus
The excess of the actuarial valuation of a pension scheme’s assets over the scheme’s actuarial liability.
Actuarial valuation
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.