Salary escalation is one of the two financial assumptions that drive an actuarial valuation, and unlike the discount rate it rests almost entirely on management’s own judgement. This guide covers what the standards require, how the assumption must stay compatible with the discount rate, and which salary base to escalate under the new labour codes.
There is more to selection of discount rate than simply looking up the interest rates on internet. Many companies don’t realise the complexities involved and need to do more than they are doing currently. Any actuarial valuation involves the use of a ‘discount rate’, which is used to calculate the present value of future benefits promised […]
Setting the right actuarial assumptions is central to the accuracy of any actuarial valuation. However, there is a general lack of understanding among the stakeholders about how the assumptions should be set. No matter how much care is taken in doing an actuarial valuation, the results could still be useless if assumptions are not set […]