Actuarial gain or loss,
Definition of Actuarial gain or loss:
While those accounting rules require pension assets and liabilities to be marked to market on an entity’s balance sheet, they allow actuarial gains and losses, or changes to actuarial assumptions, to be amortized through comprehensive income in shareholders' equity rather than flowing directly through the income statement.
Actuarial gain or loss refers to an increase or a decrease in the projections used to value a corporation’s defined benefit pension plan obligations. The actuarial assumptions of a pension plan are directly affected by the discount rate used to calculate the present value of benefit payments and the expected rate of return on plan assets. The Financial Accounting Standards Board (FASB) SFAS No. 158 requires the funding status of pension funds to be reported on the plan sponsor’s balance sheet. This means there are periodic updates to the pension obligations, the fund performance and the financial health of the plan. Depending on plan participation rates, market performance and other factors, the pension plan may experience an actuarial gain or loss in their projected benefit obligation.
Deficit or excess of a pension plans actual costs over those estimated from actuarial assumptions.
How to use Actuarial gain or loss in a sentence?
- Actuarial gains and losses are created when the assumptions underlying a company's projected benefit obligation change.
- Accounting rules require companies to disclose both the pension obligations (liabilities) and the assets meant to cover them. This shows investors the overall health of the pension fund.
- All defined benefits pension plans will see periodic actuarial gains or losses as key demographic assumptions or key economic assumptions making up the model are updated.
Meaning of Actuarial gain or loss & Actuarial gain or loss Definition