A method under which the actuarial present value of each increment of an individual’s projected benefits is allocated on a level basis over the future earnings or service of the individual between the age at which such increment is first recognized and the exit age(s). The portion of this actuarial present value allocated to a valuation year is called the normal cost. Each individual’s portion of the actuarial accrued liability should be determined on a consistent basis, usually as the retrospective accumulation of the individual’s prior actuarial accrued liability and prior normal cost, using the valuation actuarial assumptions. (ASOP No. 4)
CreativeMinds WordPress Plugin ASB Glossary
Print Friendly, PDF & Email