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employee, directly computes an accrued liability, and provides for
full funding upon retirement.
Mr. Cohen opined that (1) the account limit for the reserve is
equal to the reserve (accrued liability) computed under the entry
age normal cost method, (2) for retirees, the reserve (accrued
liability) is the present value of future benefits, and (3) for
active employees, the reserve is the present value of future
benefits minus the present value of future normal costs.
b. Mr. Scharmer
Mr. Scharmer is an expert in actuarial science and is a
principal at Mercer. He is a fellow of the Society of Actuaries,
an enrolled actuary under ERISA, a member of the American Academy
of Actuaries, and a member of the Conference of Actuaries.
Mr. Scharmer opined that the account limit for a reserve under
section 419A(c)(2) was equal to the accrued liability using the
entry age normal cost method. For 1991-94, Mr. Scharmer calculated
the account limit for the reserve by applying the entry age normal
cost method and by using the same facts and assumptions that Mercer
relied upon when it prepared the 1991-94 valuation reports. Mr.
Scharmer computed the accrued liability (dollars in millions) on
the valuation date for each year as follows:
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