EXPLAINER: What are some Acturial Assumptions in the Context of Defined Benefit Plans?
Posted on 05/21/2020
What are some Acturial Assumptions in the Context of Defined Benefit Plans?
Actuarial assumptions are factors which actuaries use in estimating the cost of funding a defined benefit (DB) pension plan. An actuarial assumption might include predicting a person’s lifespan given their age, gender, and health conditions.
Some examples of these assumptions include:
1. Rate of Return on Plan Investments
2. Plan Participants (Retirement, Disability, Termination, etc.)
3. Mortality Rates