Modified Aggregate Funding

[Guest MikeMiller]

I don't have much experience with this funding method and I am having trouble duplicating the Normal Cost calculation from last year. I assumed that the Normal Cost = Pres. Value of Future NC / Average Temporary Annuity; where the Avg. Temp. Annuity = Pres Value of Future Comp / Total Current Comp (actives)

Last year's numbers look like this:

PV Fut Comp = 47,437,789

Current Comp (actives) = 2,781,666

Avg Temp Annuity calculated = 14.0398

How did this 14.0398 come about?

[MGB]

I have never heard of "modified aggregate," so I don't know if it is a special method with particular calculation procedures.

Are you sure it is not individual aggregate? In that case, the average temporary annuity is an average of individual calculations, not the calculation based on averages.

Why is this question even being asked? Who was the actuary last year? Why don't they answer this?

[Guest MikeMiller]

I am positive that it is not Individual Aggregate.

The prior actuary has been unhelpful and unreachable to say the least. All I have to go from is the prior valuation.

[MGB]

I strongly urge this be reported to ABCD. Such conduct by former actuaries should not be condoned and needs forceful action to assure adherence to professional standards concerning communications with other actuaries.

[Guest DFerrare]

Mike:

I have seen the modified aggregate method used where the average temporary annuity factor is based on "tabular" normal costs for each participant. The factor is the sum of the PV of Future tabular NCs/ the sum of the tabular NCs. The tabular NCs can be either ILP or EAN. But I would have expected the development of the annuity factor to be illustrated on the valuation report.

Any help?

[Guest MikeMiller]

D,

Thanks for the help! That is exactly how it is being calculated. You are a savior!