Plan Termination - The Final Valuation

[Guest mingblue]

I have a "frozen" plan whose termination date is anticipated to be 4/1/07 - the plan year runs 7/1-6/30 - the client purchased annuities for all inactives this past December - we are just now doing the 7/1/06 actuarial valuation.

I anticipate 2 bases being created as of 7/1/06 - (1) an experience base determined using the funding assumptions in place as of 7/1/05 and (2) using the annuity values for the inactive liability as of 7/1/06 & creating an assumption change base - naturally the final charges will be pro-rated for the 9 month period up to the date of termination.

It has been suggested that I only value the active life liability as of 7/1/06 and, assuming I change assumptions to anticipate their elections and respective liability as of the termination date of 4/1/07, make the before/after assumption change liability for this group my "assumption change" base.

Question : Which is the more actuarially correct way of creating the assumption change base ? do both methods produce the same base ?

[david rigby]

replies here:

http://benefitslink.com/boards/index.php?showtopic=34377