Actuarial Cost Methods

Definition of "Actuarial cost methods"

Robert Anarumo
  Florida Realty Marketplace

System for calculating the relationship between a pension plan's present cost and its present future benefits. This relationship shows the extent to which a pension plan's benefits are funded. The objective is to identify on a year-by-year basis the cost of benefits accrued for the particular year. To illustrate, a relationship of 1.0 shows that there is 100% funding available for the pension plan's benefits.

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