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Present Value of DB Benefit


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I've done this a few times. I use the PV assumptions in the plan, as they would apply for purposes other than lump sums (assuming the plan has such a distinction). Other reasonable methods might be a current liability calculation, or an ABO. However, I prefer not to use an interest rate that is variable. Others may have the opposite opinion.

In all cases, any response to this question will be in writing and very strong caveats are important.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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They should tell you what assumptions to use. Alternatively, giving them a set of numbers based on different rates will allow them to see the range of possibilities.

None of the "official" rates used by the actuary will have any meaning to their situation unless it is owners of a business with a very small plan whereby the value may have more meaning beyond the benefit itself.

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