“Your biggest risk will be the one you don’t take.”
Know what risks to take and when. An actuarial consulting firm coaches you to do just that using mathematical and statistical methods to assess risks. Any organization will need actuaries when their aims align with values in order to achieve equilibrium between earned capital and provision to pay off expected benefits.
The actuary consultancy firms Perform statutory valuations (AS15 actuarial valuation, IAS19, US GAAP and other International Accounting Standards) of your organization's employee benefit schemes so that you stay in compliance with the regulatory standards and manage to plan for the future intelligently.
Need and Importance
Not many companies understand the importance of actuarial valuation in the success of a company. But, as a matter of fact, they participate as a leader in guiding the company through the routes of heights.
• Assistance in making required contributions: The key purpose of an actuarial valuation is to inform plan sponsors of the amount that needs to be contributed each year to adequately fund benefits. This ensures that actuarially determined contributions are faithfully paid to the plan each year.
• Assessing the Funding Progress: Actuarial consulting firms use historical information assess funding progress like- Is the funded ratio improving over time? Is the rate of improvement consistent with the employee’s funding policy?
• Mitigation of Risks: Information from the actuarial valuation by consultancy firms can help your company uncover risk exposure related to the funding of benefits. Actuarial firms helps clients identify these risks and take appropriate and timely action to mitigate them.
• Ensuring Reliable Data: For an actuarial valuation to be reliable, the consultants assure that the underlying data is reliable as well. Employers should work closely with the actuaries to ensure that steady information is provided in a timely manner.
• Validating Methods through Experience Studies: The reliability of an actuarial valuation also depends on the use of reasonable methods and assumptions. Experience studies are performed to help to ensure the assumptions are in line with the plan’s demographic and economic experience. This aids in or can be used as a guide to make necessary changes.
Actuarial valuations are also done for calculating contribution rate for funded schemes and during mergers & acquisitions. The case for employees liabilities e.g. gratuity, leave encashment etc. are similar to that of adding depreciation.
Gratuity liability accumulates due to services rendered by the employees during the year. This liability also increases on account of the following reasons listed below:
• Increase in salary
• Time period of retirement gets reduced by 1 year.
Gratuity is payable on exit after 5 years of service, actuarial valuation takes care of this contingency also with the help of attrition rates. Finally gratuity is payable on death also irrespective of length of past service. Actuary during actuarial valuation applies appropriate mortality rates to provide for financial effect of likelihood of earlier payment on death of an employee.
Actuaries rely on the discreet changes in the industry and their consequences. Therefore, actuaries consulting firms’ functions toy around the unexpectedness and relative results.
Know what risks to take and when. An actuarial consulting firm coaches you to do just that using mathematical and statistical methods to assess risks. Any organization will need actuaries when their aims align with values in order to achieve equilibrium between earned capital and provision to pay off expected benefits.
The actuary consultancy firms Perform statutory valuations (AS15 actuarial valuation, IAS19, US GAAP and other International Accounting Standards) of your organization's employee benefit schemes so that you stay in compliance with the regulatory standards and manage to plan for the future intelligently.
Need and Importance
Not many companies understand the importance of actuarial valuation in the success of a company. But, as a matter of fact, they participate as a leader in guiding the company through the routes of heights.
• Assistance in making required contributions: The key purpose of an actuarial valuation is to inform plan sponsors of the amount that needs to be contributed each year to adequately fund benefits. This ensures that actuarially determined contributions are faithfully paid to the plan each year.
• Assessing the Funding Progress: Actuarial consulting firms use historical information assess funding progress like- Is the funded ratio improving over time? Is the rate of improvement consistent with the employee’s funding policy?
• Mitigation of Risks: Information from the actuarial valuation by consultancy firms can help your company uncover risk exposure related to the funding of benefits. Actuarial firms helps clients identify these risks and take appropriate and timely action to mitigate them.
• Ensuring Reliable Data: For an actuarial valuation to be reliable, the consultants assure that the underlying data is reliable as well. Employers should work closely with the actuaries to ensure that steady information is provided in a timely manner.
• Validating Methods through Experience Studies: The reliability of an actuarial valuation also depends on the use of reasonable methods and assumptions. Experience studies are performed to help to ensure the assumptions are in line with the plan’s demographic and economic experience. This aids in or can be used as a guide to make necessary changes.
Actuarial valuations are also done for calculating contribution rate for funded schemes and during mergers & acquisitions. The case for employees liabilities e.g. gratuity, leave encashment etc. are similar to that of adding depreciation.
Gratuity liability accumulates due to services rendered by the employees during the year. This liability also increases on account of the following reasons listed below:
• Increase in salary
• Time period of retirement gets reduced by 1 year.
Gratuity is payable on exit after 5 years of service, actuarial valuation takes care of this contingency also with the help of attrition rates. Finally gratuity is payable on death also irrespective of length of past service. Actuary during actuarial valuation applies appropriate mortality rates to provide for financial effect of likelihood of earlier payment on death of an employee.
Actuaries rely on the discreet changes in the industry and their consequences. Therefore, actuaries consulting firms’ functions toy around the unexpectedness and relative results.
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