actuarial valuation is a determination of the costs
and liabilities of a System as well as the assets of
a System. A valuation relies on data for current active
and retired members as of a given date called the valuation
date. Some of the required data to perform a valuation
for active members includes date of birth, pay, and
credited service. For retired members, date of birth,
monthly benefit, and benefit option are some of the
required data elements.
active members, the valuation projects expected benefits
at retirement based on estimated pay and service,
and the plans benefit formula. The valuation
determines the present value of the liability associated
with service to date (past service). For retirees,
the valuation determines the present value of payments
expected to be made for the retirees lifetime.
These items are known as the Actuarial Accrued Liability.
The Actuarial Accrued Liability less plan Assets produces
the Unfunded Actuarial Accrued Liability.
valuation also develops Normal Cost (or Current Cost)
which is the present value of benefits expected to
be earned during the current year.
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