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Pension accounting primer
1. Understanding Actuarial Results A Pension Accounting Primer Johnson, West & Co., PLC Van Iwaarden Associates June 16, 2010 Mark Schulte, FSA, EA, MAAA 612.596.5971 [email_address]
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11. Actuarial Speed Dating Determining the value of pension payments Start Working Current Age Retirement Age Death Period of Annuity Payments 35 45 65 95
12. Actuarial Speed Dating Term structure of interest rates Time Return 5 years 3% 6% 30 years
13. Actuarial Speed Dating Time Return Segment 1 2% 6% Segment 3 4% Segment interest rates Segment 2
14. Actuarial Speed Dating Calculating the present value of benefits Hire Age Current Age Retirement Age Death 4% 6% Example: $100 x (1+.04)^(-20) = $46 $100 x (1+.06)^(-50) = $5 35 45 65 95