RETIREMENT PLAN
ACTUARIAL REPORT
Sample Report
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
ACTUARIAL CERTIFICATION
This report presents the recommended Philippine Accounting Standards 19 (PAS 19) actuarial disclosures
for the retirement plan of Sample Company for the annual period ending 31-Dec-2011.
Actuarial computations under PAS 19 are for purposes of fulfilling employer accounting requirements. The
calculations reported herein have been made on a basis consistent with my understanding of the standard.
Determinations for purposes other than meeting employer financial accounting requirements may be
significantly different from the results reported herein. Accordingly, additional determinations are needed
for other purposes, such as judging benefit security at termination or adequacy of funding for an ongoing
plan.
In my opinion this actuarial report is based on data that is reliable on the aggregate, appropriate actuarial
assumptions, and generally recognized and accepted actuarial principles.
Further, this is to certify that I am not aware of any material financial relationship with the Company or its
auditors that could create a conflict of interest and impair the independence and objectivity of this report.
Respectfully,
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY.... 3
II. DATA..... 4
V. DATA SCHEDULES. 17
EMPLOYEE DATA
PLAN ASSETS
Sample Report
2
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
I. EXECUTIVE SUMMARY
A. Introduction
1. This actuarial report on the retirement plan of Sample Company [Company] was performed with
the following objective:
a. Recommend the required PAS 19 disclosures for the annual period ending 31-Dec-2011.
The projected expense for the period ending 31-Dec-2012 is also shown.
2. The Companys retirement plan is a non-contributory defined benefit plan with a single lump sum
payment covering retirement and ancillary benefits.
2. The projected expense for the annual period ending 31-Dec-2012 is 209.7M.
3. Sensitivity analysis was performed for key actuarial assumptions. This is in line with the upcoming
2013 changes to PAS 19. Results are detailed in section IV.H.
C. Main Assumptions
1. The Projected Unit Credit [PUC] actuarial cost method was applied to all the benefits without
using one-year term cost.
2. The critical assumption of turnover rates was based on the companys experience.
Sample Report
3
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
II. DATA
The entire data was provided by the Company directly or indirectly through plan administrator, trustees
and others. The data passed certain internal consistency and reasonability checks, but not audited. The
Company retains the responsibility for the completeness and integrity of all the submitted data.
A. Employee Data
The employee data pertaining to the 31-Dec-2011 valuation is composed of 1,080 employees with an
average age of 38.2 years, average past service of 12.9 years and average expected future service of
13.3 years.
C. Plan Assets
The fair value of net plan assets as of 31-Dec-2011, as provided by the Companys trustee bank, is
200.0M. Additional details are shown in in V. Data Schedule C.
Sample Report
4
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
10 Turnover Table
Sample Report
5
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
The Accrued Liability [AL] or Present Value of Defined Benefit Obligation [DBO] is the part of
the Actuarial Present Value of Benefits allocated to all periods prior to the valuation date.
The Normal Cost [NC] or Current Service Cost [CSC] is the part of the Actuarial Present Value of
Benefits allocated to the valuation year.
2. The discount rate was determined in accordance with the Financial Reporting Standard Council
[FRSC] approved Q&A 2008-01(Revised) document, which mandates that discount rates reflect
(a) benefit cash flows and (b) use of zero coupon rates, even though theoretically derived.
The procedure of bootstrapping was applied to the PDST-R2 benchmark government bonds as of
the valuation date to arrive at the theoretical zero coupon yield curve. These derived rates were
then used to compute the present value of the expected future benefit cash flows across valuation
years. Finally, the single-weighted discount rate was calculated as the uniform discount rate that
produced the same present value.
3. The expected return rate on assets was set reflecting the asset allocation as well as historical and
projected net asset returns.
4. The salary increase rate assumption, which was supplied by and discussed with the Company,
represents the projected increases in employee salaries.
5. To account for death and disability probabilities, published tables were employed.
6. The turnover table was based on a study of the Companys unique turnover experience. Turnover
represents employees leaving employment prior to the retirement age due to reasons other than
death and disability.
7. Present value calculations under PAS 19 make use of the discount rate assumption as mandated by
the standard. On the other hand, present value calculations for the funding valuation make use of
the expected return rate on assets.
Sample Report
6
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
FINANCIAL REPORTING
DISCLOSURE
RECOMMENDATIONS
Sample Report
7
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
Sample Report
8
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
31-Dec-2010 31-Dec-2011
1. Economic Assumptions
2. Employee Data
3. Notes
Sample Report
9
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
PROJECTED
31-Dec-2011 31-Dec-2012
Sample Report
10
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
31-Dec-2011
i. Net Defined Benefit Liability (Asset) [Item 2.c + 2.g + 2.h] (195,000,000)
Sample Report
11
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
31-Dec-2011
a. Retire 71.7%
b. Turnover 16.0%
c. Death 7.3%
d. Disability 4.9%
e. Total 100.0%
Sample Report
b. Assumption (Gain) Loss 8,000,000
c. Total 10,000,000
12
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
31-Dec-2011
c. Total 10,000,000
Sample Report
13
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
31-Dec-2011
Sample Report
14
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
31-Dec-2011
a. Year 1 26,212,096
b. Year 2 27,538,713
c. Year 3 276,776,891
d. Year 4 24,272,834
e. Year 5 26,173,138
f. Year 6 29,699,283
g. Year 7 31,702,796
h. Year 8 346,039,523
i. Year 9 28,716,137
j. Year 10 31,026,821
2. Metrics
Sample Report
15
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
H. Sensitivity Analysis
This sensitivity analysis shows the impact of changes in key actuarial assumptions.
Each sensitivity assumes the stipulated changes relative to the base case while holding all else
constant.
The single weighted discount rate approach is only true for the base case.
Sample Report
16
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
DATA SCHEDULES
Sample Report
17
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
A. Analysis of the Employee Data Used for the 31-Dec-2011 Actuarial Valuation
1. Metrics
Male Female All
Number of Employees 540 540 1,080
Average Age 38.2 38.2 38.2
Average Past Service Years 12.9 12.9 12.9
Ave Expected Future Service Yrs. 15.1 15.1 15.1
Total Annual Salary (x12) 334,110,740 334,110,740 668,221,480
Average Annual Salary 618,724 618,724 618,724
[ 30 , 35 ) 20 20 20 20 20 20 120 11%
[ 35 , 40 ) 20 20 20 20 20 20 120 11%
[ 40 , 45 ) 20 20 20 20 20 20 120 11%
[ 45 , 50 ) 20 20 20 20 20 20 120 11%
[ 50 , 55) 20 20 20 20 20 20 120 11%
[ 55 , 60 ) 20 20 20 20 20 20 120 11%
[ 60, 65 ) 0%
65 & Up 0%
Total 180 180 180 180 180 180 1,080 100%
% 17% 17% 17% 17% 17% 17% 100%
Sample Report
18
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
A. Analysis of the Employee Data Used for the 31-Dec-2011 Actuarial Valuation
Continued
[ 18 , 20 ) 6%
[ 16 , 18 ) 7%
[ 14 , 16 ) 13%
[ 12 , 14 ) 7%
[ 10 , 12 ) 9%
[ 8 , 10 ) 6%
[6,8) 9%
Sample Report
[ 4, 6 ) 4%
[ 2, 4 ) 11%
[0,2) 0%
19
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
4. Normal Retirement
Requirement Attainment of age 60 with at least 5 credited service
years
Benefit One month's basic salary per year of service
5. Early Retirement
Requirement Attainment of age 50 with at least 10 credited service
years.
6. Resignation
Requirement At least 5 years of credited service.
Benefit One month's basic salary per year of service adjusted by
the following schedule.
Sample Report
20
Sample Company
Actuarial Valuation
Key Actuarial Intelligence, Inc.
C. Plan Assets
Sample Report
21