Schedule B credit balances - are projections typical?

[Guest Happy Actuary]

I am involved with an actuarial malpractice case and the question arose as to whether it is typical for a multi-employer plan actuary to provide a projection of how the credit balance might fare in future years?

Since the cents per hour rate is usually fixed, the credit balance becomes essential. Are there any articles or publications that discuss that this kind of projection is a good idea?

Regardless, have you typically provided these projections?

Thanks in advance for your response,

[david rigby]

Since the cents per hour rate is usually fixed, the credit balance becomes essential.

Why?

(I don't work w ME plans, but I'm willing to learn.)

[ak2ary]

Unlike a single employer plan, the funding in Multis is not necessarily on a basis that is actuarially sound. That is , the PV future contributions plus the assets may be less than the present value future benefits. The first clue is that the contribution is not sufficient to cover the NC plus interest on the unfunded, thother, more common clue is that the credit balance is being drawn down to meet minimum funding. If the credit balance in a multi is declining, judgement day is just around the corner. In cases where the credit balance is being drawn down, projections are common to estimate how long the credi balance will last until a funding deficiency arises, at which time contributions have eto rise or benefits have to shrink or both.

We provide projected valuations to all odf our multi's and credit balance maintenace is crucial in these projection. Normally we provide a deterministic modeler in eXcel, so that the trustees can model the impact of different rates of return, different benefit multipliers, different contribution rates etc.

Of course only a few years ago, these projections were very very expensive

Happy- I dont know of any literature, but I will ask the folks in our multi unit and if they have aything, I'll give it to you in DC

[Guest Happy Actuary]

Thanks ak

Unlike a single employer plan, the funding in Multis is not necessarily on a basis that is actuarially sound. That is , the PV future contributions plus the assets may be less than the present value future benefits. The first clue is that the contribution is not sufficient to cover the NC plus interest on the unfunded, thother, more common clue is that the credit balance is being drawn down to meet minimum funding. If the credit balance in a multi is declining, judgement day is just around the corner. In cases where the credit balance is being drawn down, projections are common to estimate how long the credi balance will last until a funding deficiency arises, at which time contributions have eto rise or benefits have to shrink or both.

We provide projected valuations to all odf our multi's and credit balance maintenace is crucial in these projection. Normally we provide a deterministic modeler in eXcel, so that the trustees can model the impact of different rates of return, different benefit multipliers, different contribution rates etc.

Of course only a few years ago, these projections were very very expensive

Happy- I dont know of any literature, but I will ask the folks in our multi unit and if they have aything, I'll give it to you in DC