5 issues to consider for funding a gratuity scheme

Issues to consider for funding a gratuity scheme

Under the right circumstances, a decision for funding a gratuity scheme could deliver significant benefits to the companies. Gratuity is a statutory benefit – employers are required to pay a lumpsum benefit to their employees who have served for at least five years. The lumpsum is generally calculated as 15 days of eligible salary for […]

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4 issues about actuarial valuation of leave schemes

actuarial valuation of leave schemes

Treatment of leave schemes under AS 15 and Ind AS 19 is widely misunderstood. Companies end up spending resources on actuarial valuation of leave schemes that may not require any, while fail to identify schemes that may require one. Background Companies run several types of leave benefit schemes for their employees. Privilege leaves (also known as earned or […]

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4 ways in which Ind AS 102 can affect your company

4 ways in which Ind AS 102 can affect your company

Ind AS 102 will bring much needed uniformity in valuation and accounting of share-based benefits. However, the cost for the affected companies is likely to increase significantly. What Ind AS 102 is all about? Ind AS 102 prescribes financial reporting in respect of share-based benefits and is relevant for companies which remunerate their employees by share-based (or stock option) […]

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6 reasons why your pension reporting under IAS 19 may not be correct

IAS 19 - why your pension reporting may not be correct

Actuarial valuation and reporting of a pension scheme under IAS 19 is significantly more complex than other employee benefit plans. Several issues, which after often ignored, need to be understood and allowed for when reporting for pension schemes.

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Discount rate for actuarial valuation as at 31 March 2018

Discount rate for actuarial valuation 31 March 2018

It is the end of another financial year and time for companies to prepare their year-end financial statements for FY 2017-18. The discount rate for actuarial valuation as at 31 March 2018 is now known. This post explains the movement in the interest rate curves over the FY 2017-18 and how that is expected to […]

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Discount rate for actuarial valuation as at 31 Dec 2017

Discount rate chart

For many companies, this is the time to finalise their interim accounts for the third quarter of FY 2017-18. An understanding of the movement in discount rate during this period will help in making an appropriate provision towards employee benefits liabilities. Comparison of yield curves: 31 Dec 2017 vs 31 Mar 2017 The discount rate […]

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Actuarial valuation of pension liability in corporate transactions

actuarial valuation of pension in mergers and acquisitions

During corporate transactions, such as mergers and acquisition, actuarial valuation of pension and other employee benefit schemes is often ignored. The parties involved in the transaction spend most of their time and focus on ‘tangible’ aspects of the balance sheet. They end up taking ‘shortcuts’ or proxy approaches with disastrous consequences for their shareholders. I […]

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Understanding actuarial gain or loss in AS 15 report

understanding actuarial gain or loss in AS 15 report

The concept of actuarial gain or loss is central to any actuarial valuation, but is widely misunderstood. A clear understanding of this concept could pre-empt a range of questions and free up time and resources tied up in the actuarial valuation process. An understanding of actuarial loss under AS 15, or ‘remeasurement’ under Ind AS […]

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How to set attrition assumption for actuarial valuation

employee attrition assumption for actuarial valuation

Employee attrition rate is an important assumption that can have significant impact on the actuarial liability of employee benefit schemes. An incorrect assumption will invariably lead to erroneous liability to be recorded in the balance sheet. In our last post, considerations for setting the salary escalation rate were discussed. In the same post, we also provided some […]

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How to set salary escalation assumption for actuarial valuation

salary escalation assumption for actuarial valuation

Salary escalation rate is arguably the second most significant assumption used in an actuarial valuation after the discount rate. However, unlike the discount rate, the reporting enterprise has a much greater role to play in setting this assumption. It is important to understand the complexities involved. Actuarial reporting requirements for employee benefit schemes in India, […]

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