GLOSSARY
OF ACTUARIAL TERMS |
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| Actuarial
Accrued Liability |
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| That
portion of the Actuarial Present Value of pension plan
benefits which is not provided by future Normal Costs
or employee contributions. It is the portion of the
Actuarial Present Value attributable to service rendered
as of the Valuation Date. |
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| Actuarial
Assumptions |
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| Assumptions,
based upon past experience or standard tables, used
to predict the occurrence of future events affecting
the amount and duration of pension benefits, such as:
mortality, withdrawal, disablement and retirement; changes
in compensation; rates of investment earnings and asset
appreciation or depreciation; and any other relevant
items. |
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| Actuarial
Cost Method (or Funding Method) |
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| A
procedure for allocating the Actuarial Present Value
of all past and future pension plan benefits to the
Normal Cost and the Actuarial Accrued Liability. |
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| Actuarial
Gain or Loss (or Experience Gain or Loss) |
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| A
measure of the difference between actual experience
and that expected based upon the set of Actuarial Assumptions,
during the period between two Actuarial Valuation dates.
Note: The effect on the Accrued
Liability and/or the Normal Cost resulting from changes
in the Actuarial Assumptions, the Actuarial Cost Method
or pension plan provisions would be described as such,
not as an Actuarial Gain (Loss).
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| Actuarial
Present Value |
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| The dollar
value on the valuation date of all benefits expected
to be paid to current members based upon the Actuarial
Assumptions and the terms of the Plan. |
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| Amortization
Payment |
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| That portion
of the pension plan appropriation which represents payments
made to pay interest on and the reduction of the Unfunded
Accrued Liability. |
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| Annual
Statement |
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| The statement
submitted to PERAC each year that describes the asset
holdings and Fund balances as of December 3l and the
transactions during the calendar year that affected
the financial condition of the retirement system. |
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| Annuity
Reserve Fund |
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| The fund into
which total accumulated deductions, including interest,
is transferred at the time a member retires, and from
which annuity payments are made. |
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| Annuity
Savings Fund |
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| The fund in
which employee contributions plus interest credited
are held for active members and for former members who
have not withdrawn their contributions and are not yet
receiving a benefit (inactive members). |
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| Assets |
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| The total value
of securities. Assets grow through employer and employee
contributions, as well as investment earnings. They
are reduced by benefit payments and other disbursements.
For valuation purposes, assets are usually measured
at market value. |
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| Cost
of Benefits |
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| The estimated
payment from the pension system for benefits for the
fiscal year. This is the minimum amount payable during
the first six years of some Funding Schedules. |
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| Expense
Fund |
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| The fund into
which the appropriation for administrative expenses
is paid and from which all such expenses are paid. |
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| Funding
Schedule |
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| The schedule
based upon the most recently approved actuarial valuation
which sets forth the amount which would be appropriated
to the pension system in accordance with Section 22D
of M.G.L. Chapter 32. |
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| GASB |
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| Governmental
Accounting Standards Board |
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| Normal
Cost |
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| Total Normal
Cost is that portion of the Actuarial Present Value
of pension plan benefits which is expected to accrue
in the current fiscal year. The Employee Normal Cost
is the amount of the expected employee contributions
for the fiscal year. The Employer Normal Cost is the
difference between the Total Normal Cost and the Employee
Normal Cost. |
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| Pension
Benefit Obligation |
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| The portion
of the Actuarial Present Value attributable to past
service in accordance with the Projected Unit Credit
cost method as stipulated by GASB Statement Number 5
(GASB 5). GASB 5 has been superseded by GASB Statements
Number 25 and 27. |
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| Pension
Fund |
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| The fund into
which appropriation amounts as determined by PERAC are
paid and from which pension benefits are paid. |
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| Pension
Reserve Fund |
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| The fund which
shall be credited with all amounts set aside by a system
for the purpose of establishing a reserve to meet future
pension liabilities. These amounts would include excess
interest earnings. |
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| Special
Fund for Military Service Credit |
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| The fund which
is credited with amounts paid by the retirement board
equal to the amount which would have been contributed
by a member during a military leave of absence as if
the member had remained in active service of the retirement
board. In the event of retirement or a non-job related
death, such amount is transferred to the Annuity Reserve
Fund. In the event of termination prior to retirement
or death, such amount shall be transferred to the Pension
Fund. |
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| Unfunded
Accrued Liability |
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| The excess of
the Actuarial Accrued Liability over the Assets. |
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