Actuarial Cost Method

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Actuarial Cost Method

Any method used to determine how much money the premiums to a pension must be each month. In order to remain solvent, a pension's premiums plus the return of investment must equal or exceed the amount paid out to retirees. The company managing the pension uses an actuarial cost method to calculate premiums based on that assumption. It is also called an actuarial funding method.
References in periodicals archive ?
All accepted actuarial funding methods will generate actuarially determined employer contribution amounts sufficient to provide all the resources needed to pay promised benefits on time if the underlying assumptions hold true.
Currently, employers may use any one of six acceptable actuarial funding methods for purposes of calculating OPEB expense.
For financing purposes, public-sector employers have tended to favor actuarial funding methods that produce annual contribution amounts that can be expected to remain relatively constant over time as a percentage of payroll.