Three Pension Cost Methods under Varying Assumptions

A pension plan administrator promises certain benefits in the future in exchange for labor today. In order to budget for this expense and create more security for the participant, the administrator uses a pension cost method. Each cost method assigns a portion of the future liability to the current year. This is called the normal cost. We calculate the normal cost under three cost methods using different annuity, interest and inflation assumptions. Then we make comparisons between cost methods as well as between assumption changes. The cost methods considered in this paper are the unit credit cost method, projected unit credit cost method, and the entry age cost method. Both the constant dollar and the constant percent versions of the entry age cost method are considered.

Name thesis:degree_name

MS

Grantor dc:publisher

Brigham Young University - Provo

Author dc:creator

• Grizzle, Linda S.

• pension plan
• pension fund
• cost method
• normal cost
• actuarial liability
• unit credit
• projected unit credit
• entry age
• Mathematics

Language dc:language

English

Repository record dc:identifier

https://scholarsarchive.byu.edu/etd/543

OAI identifier oai:identifier

oai:scholarsarchive.byu.edu:etd-1542