Funding Valuation 101

Types of Funding Valuation 1. Funding Valuation for BIR Filing – A certified actuarial funding valuation report is one of the document requirements when securing a retirement tax certification from the BIR. This is found in Sec. 6 (as amended in RR 1-83) of RA 4917 or the Private Retirement Benefit Plan Regulations. 2. Annual Funding Valuation – The Annual Funding Valuation Report provides an economic comparison of a Company's retirement fund and retirement liability to determine the Company's funding status. What differentiates PAS19 Valuation and Annual Funding Valuation? Both PAS19 and Annual Funding determine a Company's retirement liability as of a current period. While PAS19 uses market discount rates in accordance with generally accepted accounting principles, Annual Funding uses actual investment income return rates for a more appropriate liability estimation. Why do an Annual Funding Valuation? Annual Funding has two major implications for a Company. First, it provides a more accurate estimation of the unfunded portion of the retirement liability (best-practice is 80% funding level). Second, it determines the maximum tax deductible amount the Company can get from its retirement fund contribution. Engage your Actuary. The Annual Funding Valuation can be packaged with your PAS19 Valuation. Ask your Account Officer to add this scope in your renewal proposal.