How to Spot a Healthy Funding Level for Your Retirement Benefits?

Is our retirement fund sufficient to pay retirement benefits?

A healthy funding level provides both benefit security for the employees and programmed cash flows from the company. Still, a study showed that only 11% of companies have a healthy fund while 67% majority are at critical funding levels. There may be a lack of proper management information for a funding policy and best-practice processes. The right valuation will provide management the suitable recommendations for each funding scenario.

How do we know how much to fund for the retirement plan?

An Actuarial funding valuation is the first step in determining the proper funding level. As a best practice, the funding valuation should be done annually with your PAS19 valuation. The report presents the optimal funding for the ensuing year and maximizes the tax deductibility of the contributions. The calculation is based on the long-term outlook of the retirement fund investments and not the prescribed market interest rates used in PAS19.

We have adopted a robust funding framework. What should we do next?

Long-term investments like retirement funds are exposed to interim market fluctuations and perhaps bigger risks. To achieve the proper balance of investment returns and risks, an Asset-Liability Management of the retirement fund is a strategic imperative. Guidance from an actuary on the average timing of retirement payments will optimize the fund's strategic investment mix and tenor.

Talk to your actuary

Reach out to the Miravite Actuary through Chesley.Ligacion@MAi-Asia.com. You can also connect with us through your Account Officers or via mobile and Viber at 09175052105