Accrued Benefit Cost Method
Definition of "Accrued benefit cost method"
Actuarial method of crediting retirement benefits earned and the costs associated with these earned retirement benefits. An increment (unit) of benefit is credited for each year of recognized service that an employee has earned. Then the present value of these benefits (including the employee's life expectancy) is calculated and assigned to the year earned. The benefit earned by the employee can take the form of a flat dollar amount or a percentage of compensation. For example, this may work out to 11/2% of an employee's compensation being credited to the employee's account for each year of recognized service.
Popular Insurance Terms
Means of funding permitted under the employee retirement income security act of 1974 (ERISA). The administrator of a pension plan can comply with required minimum funding standards by ...
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Coverage providing funds for maintenance of a business as closely to normal as possible in the event of a loss of a key person, owner, or partner. ...
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Nonforfeiture option that uses the cash value of an ordinary life policy as a single premium to purchase term life insurance in the amount of the original policy. The length of the term ...
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