THE IMPACT OF DIFFERENCES IN INTEREST RATE ASSUMPTIONS AT THE TIME OF FUNDING AND PAYMENT OF PENSION BENEFITS AGAINST NORMAL COST AND ACTUARIAL LIABILITY

• Main Author: INDRAYATNA, FAJAR
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/27113
• Institution: Institut Teknologi Bandung

<p align="justify">The Employer Pension Fund that carries out a defined benefit pension plan is said <br /> to be in a fulfilled condition if the amount of pension fund assets is greater than its liabilities. To measure and know these conditions the regulations require actuarial valuation at least 3 years. According to pension statistics published by OJK in 2014, the actuary uses a constant interest rate assumption annually to conduct actuarial calculations at the time of valuation. Given that pension funding is a long-term funding, this study will look at how the pension fund underwent a defined benefit plan if there are differences in interest rate assumptions at the time of funding and the payment of pension benefits. This study used a modified attained age normal method for actuarial calculation at the third year of valuation. It was found that an increase in interest rates after retirement resulted in a decrease in Normal Cost. This is due to the decline in the value of life annuities after retirement which impacts to the decrease in pension liability for the benefits to be paid so that Normal Cost also decreases.<p align="justify">