Page 243 - Group Insurance and Retirement Benefit IC 83 E- Book

192 AS 15

Example Illustrating Paragraph 72

Employees are entitled to a benefit of 3% of final salaryfor each
year of service before the age of 55.

Benefit of 3% of estimated final salaryis attributed to each year
up to the age of 55. This is the date when further service by the
employee will lead to no material amount of further benefits
under the plan. No benefit is attributed to service after that age.

Actuarial Assumptions

73. Actuarial assumptions comprising demographic assumptions and
financial assumptions should be unbiased and mutually compatible.
Financial assumptions should be based on market expectations, at the
balance sheet date, for the period over which the obligations are to be
settled.

74. Actuarial assumptions are an enterprise’s best estimates of the
variables that will determine the ultimate cost of providing post-
employment benefits. Actuarial assumptions comprise:

(a) demographic assumptions about the future characteristics of
current and former employees (and their dependants) who are
eligible for benefits. Demographic assumptions deal with matters
such as:
(i) mortality, both during and after employment;

(ii) rates of employee turnover, disability and early retirement;

(iii) the proportion of plan members with dependants who will be
eligible for benefits; and

(iv) claim rates under medical plans; and

(b) financial assumptions, dealing with items such as:
(i) the discount rate (see paragraphs 78-82);

(ii) future salary and benefit levels (see paragraphs 83-87);