Getting started

We like to ask as many questions as it takes to get a good understanding of the scope of the assignment so that a fixed fee can be quoted. We can (a) usually quote a fixed fee and (b) prepare a list of information required to perform the valuation with answers to our starter questions below:

    1. What kind of post retirement benefit plans does the organization sponsor? (e.g. medical, dental, life insurance)
    2. How many sets of eligibility/benefit formula combinations are there in each plan? Employers have had considerably more flexibility in designing their non-pension post retirement benefit plans than ERISA permits with qualified retirement plans. Thus, actuaries working with FASB ASC 715-60 frequently see several layers of “sub plans” within the main plan, especially with post retirement healthcare benefits.
    3. Approximately how many active and retired employees are in each plan?
    4. How many divisions or other employee groupings are there in the
      organization? Normally, costs will be allocated based on the answer to this question.
    5. What kind of financing does the organization use for the post retirement benefit plans? (e.g. self funding with stop loss insurance, HMO, individual Medicare Supplement policies)
    6. Is there a defined benefit pension plan for which FASB ASC 715-60 information is prepared? It is less time consuming (and therefore less costly to the employer) to check an existing turnover assumption against prior experience than it is to develop a set of turnover factors from basic data.
    7. Can the census data be provided in machine readable format? Most organizations these days can provide data on a floppy disk. Back in the old days (i.e. pre PC) this was a much more important question.
    8. Is the organization public or private? This question is a holdover from the pre 1995 days when the smaller non public organizations had an extra two years to comply with FASB ASC 715-60. It still provides useful information, however.
    9. What is the organization’s fiscal year end?
    10. Are there any special post retirement healthcare or other non pension benefits for executives? We like to ask this question since many people do not realize that special post retirement welfare benefits for executives may be affected by FASB ASC 715-60.
    11. What is the name of the organization’s public accounting firm?