Question

Should a company that wants to retain older workers consider an actuarial increase for those who work beyond normal retirement age? Is the benefits model relevant here? Think about the factors that are used in calculating a formula-based DBP.

Answer 1

An actuarial adjustment can be seen as the revision of the different types of pf pensions plan reserves, benefits payments, or insurance premiums that are to be paid by the companies when there is a change in the retirement age of the employee. This is important to perform as when the retirement age of the employees is changed, there needs to be the defined-benefit plan which includes the payment of various types of benefits to the employees on the basis of a certain formula that includes the salary history and employment length. When there is an increase in the employment length, it is important for the companies to change the benefits received in the form of retirement plans so that they can adjust the formula-based DBP.

If we look closely, the benefits model needs to be updated as per the given situation and thus it has to be modified depending on the retirement age, and other factors.