Page 125 - IC26 LIFE INSURANCE FINANCE

Note: Actuarial valuation is the process used by an actuary (expert) to estimate the present

value of benefits to be paid under a retirement benefit scheme. Actuarial valuation should

normally be conducted at least once in every three years. Differences arising after fresh actuary

valuation should be adjusted through Profit & Loss account in the year in which fresh actuary

valuation is conducted.

Benefits funded through creation of a trust

 Amount to be contributed to the trust every year is provided through profit & loss

account.

 The amount to be contributed is calculated by actuarial valuation.

 Benefits funded through a scheme administrated by the insurer.

 The premium paid to the insurer is charged to profit & loss account.

 Such premium is calculated through actuarial valuation.

Review of Actuarial Method/Assumption

Any alterations in the retirement benefit costs, arising due to change in method/ assumption,

are EITHER, charged to credited to profit and loss account in the year of change in accordance

with Accounting Standard 5. “Prior Period and extra ordinary item and changes in accounting

policies.”

OR, spread over a period not more than the expected remaining working lives of the

participating Employees.

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010