EOY funding and PPA

[FAPInJax]

First assumption is that EOY valuations will be OK (in some geological time period).

The effective interest rate is the singular rate which produces the same funding target as the segmented rates. Therefore, it can not be determined without performing the valuation. This interest rate is used to adjust the contributions to the valuation date. This means that EOY valuations must determine the effective interest rate prior to completing the valuation because the adjusted prepaid contributions have to be subtracted from the assets.

Is that correct??

[SoCalActuary]

First assumption is that EOY valuations will be OK (in some geological time period).

The effective interest rate is the singular rate which produces the same funding target as the segmented rates. Therefore, it can not be determined without performing the valuation. This interest rate is used to adjust the contributions to the valuation date. This means that EOY valuations must determine the effective interest rate prior to completing the valuation because the adjusted prepaid contributions have to be subtracted from the assets.

Is that correct??

If you do all your liabilities first, then you know your effective interest rate.

Then you do your plan asset calculations, adjusting for contribution timing.

Then you do the shortfall bases, etc.

[mwyatt]

Good observation SoCal, that the EIR is independent of assets. For those of us who are continuing to generate pre PPA numbers for their clients (say, running Individual Aggregate to at least present a level amortization option), the EIR doesn't matter since what we're doing is just a suggestion anymore.