Ongoing funding ratios - actuarial value or market value

[Guest Keith N]

Just a quick survey,

When looking at an "ongoing funding ratio", are you typically using the actuarial value or the market value of assets?

"Ongoing funding ratio"- is a term we use to describe a comparison of the present value of the plan's total expected liabilities (PVB + PV of future expense) to the present value of the assets (AV or MV of assets + PV of Future expected contributions). It is a calculation that is typically done for multiemployer plans to make sure that the expected contribution rates are in balance with the expected benefit accruals.

It seemed to me that since this is a projection type calculation, based on the various actuarial assumptions and future events, that the Actuarial value should be used, but I have seen other actuaries using Market Value.

I'm not suggesting either is "wrong", I'm just interested in other opinions.

[david rigby]

I don't do this ratio, but I agree with your reasoning that AV seems to be the appropriate value.

We do show a "benefit security ratio", which is MV assets divided by PVAB (using funding assumptions).