Comparison of entry age normal and projected unit credit method for funding of defined benefit pension plan

A. P. Angkasa, D. Lestari, S. Devila

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

In this modern age, the quality of life of a person is always improving. This leads to longer lifespans, hence resulting in a longer pension period for that individual. Pension programs are therefore needed more than ever so that a person can receive a benefit after they retire and maintain the same quality of life they had before they retired. The topic of this paper is comparing the entry age normal and projected unit credit method for funding of a defined benefit pension plan. The entry age normal method uses the concept of projecting the benefit that will be earned at the end of an employee's career. The projected unit credit method uses the concept of benefits accrued to the date of normal cost determination. From the data simulation it can be concluded that the projected unit credit method results in a smaller normal cost compared to the entry age normal method and the projected unit credit method results in a greater actuarial liability compared to the entry age normal method.

Original languageEnglish
Title of host publicationProceedings of the 6th International Symposium on Current Progress in Mathematics and Sciences 2020, ISCPMS 2020
EditorsTribidasari A. Ivandini, David G. Churchill, Youngil Lee, Yatimah Binti Alias, Chris Margules
PublisherAmerican Institute of Physics Inc.
ISBN (Electronic)9780735441132
DOIs
Publication statusPublished - 23 Jul 2021
Event6th International Symposium on Current Progress in Mathematics and Sciences 2020, ISCPMS 2020 - Depok, Indonesia
Duration: 27 Oct 202028 Oct 2020

Publication series

NameAIP Conference Proceedings
Volume2374
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Conference

Conference6th International Symposium on Current Progress in Mathematics and Sciences 2020, ISCPMS 2020
Country/TerritoryIndonesia
CityDepok
Period27/10/2028/10/20

Keywords

  • actuarial liability
  • ancillary benefit
  • Normal cost
  • pension benefit

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