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accumulate from the date the employee began service until the
projected retirement date of that employee, will have accumulated
at retirement the amount necessary to fully fund the benefit to the
covered employee. The actuarial accrued liability is the portion
of the actuarial present value that is not provided for by future
normal costs.
c. Individual Level Premium Cost Method
The individual level premium cost method is an individual
method, similar to the entry age normal cost method. Under the
individual level premium cost method, the normal cost is separately
determined for each covered employee as a level dollar amount
which, if accumulated from the later of the date the plan is
established or the date that the employee was hired, would
accumulate at retirement the amount necessary to fully fund the
benefit to the covered employee.
The primary difference between the individual level premium
cost method and the entry age normal cost method is the date when
normal cost is assumed to commence. If the plan is established
after the employee is hired, under the entry age normal cost
method, normal cost is assumed to have retroactively commenced at
the date of hire. Under the individual level premium cost method,
normal cost begins no earlier than the date the plan is
established.
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