Actuarial Vocabulary Commonly used terms to describe pension plans: Solvency: The ability of a pension plan to pay benefits when they are owed to the members. Sustainability: A pension plan that can pay all of the promised benefits without any future modifications to contributions or benefits and get to 100 percent funding within a reasonable amount of time. Commonly used actuarial terms: Actuarial Accrued Liability (AAL): the present value of all plan benefits payable to terminated and retired members as well as the present value of the plan benefits currently accrued by current employees. the value of the as of a certain date. Actuarial Value of Assets (AVA): plan’s assets Actuaries use a smoothed value (an average over several years as the stock market may perform up or down) to reduce the year-to-year volatility of the numbers. Unfunded Actuarial Accrued Liability (UAAL): the excess of the Actuarial Accrued Liability over the Actuarial Valuation of Assets. Annual Required Contribution (ARC)/Actuarially Determined Contribution (ADC): the as a percentage of plan compensation, to employer’s periodic contribution, stated fund the cost of the benefits and amortize the Unfunded Actuarial Accrued Liability within a set time, often 30 years. For ERB the set amount of time as of June 30, 2017 is 25 years. Funded Ratio: the ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. Funding Period: how long it will take a plan, with the current percent of contributions, to be 100 percent funded.
Actuarial Vocabulary Commonly used terms to describe pension plans: Solvency: The ability of a pension plan to pay benefits when they are owed to the members. Sustainability: A pension plan that can pay all of the promised benefits without any future modifications to contributions or benefits and get to 100 percent funding within a reasonable amount of time. Commonly used actuarial terms: Actuarial Accrued Liability (AAL): the present value of all plan benefits payable to terminated and retired members as well as the present value of the plan benefits currently accrued by current employees. Actuarial Value of Assets (AVA): the value of the plan’s assets as of a certain date. Actuaries use a smoothed value (an average over several years as the stock market may perform up or down) to reduce the year-to-year volatility of the numbers. Unfunded Actuarial Accrued Liability (UAAL): the excess of the Actuarial Accrued Liability over the Actuarial Valuation of Assets. Annual Required Contribution (ARC)/Actuarially Determined Contribution (ADC): the employer’s periodic contribution, stated as a percentage of plan compensation, to fund the cost of the benefits and amortize the Unfunded Actuarial Accrued Liability within a set time, often 30 years. For ERB the set amount of time as of June 30, 2017 is 25 years. Funded Ratio: the ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. Funding Period: how long it will take a plan, with the current percent of contributions, to be 100 percent funded.
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