Actuarial valuation

Actuarial valuation,

Definition of Actuarial valuation:

  1. Many variables go into an actuarial valuation model. On the asset side, the actuary must make an assumption about employer contribution rates and the investment growth rate for the portfolio of stocks and bonds (Level 1- and 2-type assets) and other assets (illiquid Level 3-type). The calculation of payment liabilities is much more complex.

  2. An actuarial valuation is a type of appraisal of a pension fund's assets versus liabilities, using investment, economic, and demographic assumptions for the model to determine the funded status of a pension plan. The assumptions are based on a mix of statistical studies and experienced judgment. Since assumptions are often derived from long-term data, unusual short-term conditions or unanticipated trends can occasionally cause deviations from forecasts.

  3. Pension fund value as determined by computing its normal cost, actuarial accrued liability, actuarial value of its assets, and other relevant costs and values.

How to use Actuarial valuation in a sentence?

  1. Actuarial valuations are used to assess the funded status of a defined-benefit pension fund.
  2. Actuarial models rely on long-term projections that include interest rates, demographic changes, and inflation.
  3. Unlike market values, actuarial values rely on statistical inference and assumptions that are plugged into a model.

Meaning of Actuarial valuation & Actuarial valuation Definition