Recognizing the Impact of Rightsizing Matters

Following the pandemic and the business restrictions in the country, companies have been forced into Rightsizing their employee population.

How does Rightsizing affect the PAS19 Valuation?

Rightsizing, or a significant reduction in the number of employees, is recognized as a significant event (if within the valuation period), or a known subsequent event (if, by valuation date, certain to happen in 2021). These are key items that are considered in the PAS19 Actuarial Valuation.

The Miravite Actuary says:

Recognizing the financial impact of these key events, identified as a Past Service Cost or Income, is important representation of the Companies' Net Worth, especially for regulated entities.

Recent DOLE statistics exhibited these key events in industries such as Entertainment, Real Estate, and Accommodations where the employment dropped as much as 38%. Transportation and Manufacturing also experienced significant reductions.

Talk to your Actuary. Significant events or known subsequent events usually lead to a change in the funding level of your plan. Request for an Actuarial Funding Valuation to properly manage the cash flows required for the benefit security of your employees. Your Actuary can certainly help.