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 […]
Setting the discount rate for actuarial valuation correctly is often not very well understood by the reporting companies. This post summarizes some of the most common questions our clients and their auditors ask about choosing the right discount rate. For a complete overview about setting the discount rate, please refer to this post. 1) What is the […]
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 […]
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, […]
The mechanics of funded gratuity schemes remain unclear for many companies, due to a lack of regulatory framework and a general lack of understanding of actuarial principles. We have examined the issue to consider for gratuity scheme funding in our prior post. This post sets out a list of frequently asked questions about funded gratuity schemes; i.e. […]
Many employers choose to fund their gratuity liabilities by paying regular contributions to an insurance company. However, employers often do not fully understand what they gain from gratuity funds and what to expect from these arrangements.
Advanced actuarial services go beyond the usual realm of actuarial reports or statutory certificates. The ability of actuaries to predict future uncertain events and assess their financial impact can help deliver significant benefits to any organisation. Actuaries are good at making predictions about future uncertain events, and assessing the financial impact of this uncertainty. As […]
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 […]
With the arrival of Ind AS, companies need to value and account for their stock option schemes using the fair value method. There are more ways in which Ind AS will affect companies running employee stock option schemes. These are described in more detail here. This post only focusses on methods to carry out fair […]
For many companies, this is the time to finalise their interim accounts for the second 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. Source of the discount rate for actuarial valuation Companies often have to set the […]