Our Services

We provide services for actuarial valuations of Employee's Benefits as per statutory requirement of Accounting Standard 15 (revised) issued by Institute of Chartered Accountants of India. of India. For most of the companies AS 15 (revised) requires Actuarial Valuation of :

  • Actuarial valuation of Gratuity Liability
  • Actuarial valuation of Leave encashment Liability
  • Actuarial valuation of earned leave/ leave benefits
  • Actuarial valuation of sick leave benefits
  • Actuarial valuation of Pension
  • Actuarial valuation of Interest rate guarantee for provident fund
  • Actuarial valuation of LTC
  • Long term service awards
  • And other defined benefits plan

Credentials

We are providing actuarial consultancy services to government, semi government, multinational companies for last 7 years.

As AS15 (revised) requires many and much more detailed disclosure therefore actuarial valuation results are available normally 2 to 3 days after receipt of complete accurate data in respect of every item. Therefore employers / Representatives are requested to ensure that

  • Data are submitted well in advance leaving adequate time for carrying out valuation exercise and avoid last hour rush and anxiety.
  • Accuracy and correctness of the information and data while preparing annexure A
  • Discuss valuation bases with Auditors and senior management as under Indian Accounting Standard 15 (revised) such as discount rate, salary growth rate etc are to be decided by the employer.

Actuarial–valuation : a micro explanation to non actuarial person.

Why an actuarial valuation

Let us assume that a company generates some profits at the end of a year of its operations. Now any non actuarial or even non accounting professional will say depreciation needs to be provided; if it is already not provided. Similar is the case for employees liabilities e.g. gratuity, leave encashment etc.

Depreciation can be calculated by the technical expert who knows about that particular machinery. Similarly employees liability accrued during a year will be calculated by an Actuary by performing Actuarial valuation

Let us consider ‘Gratuity’ first. The similar considerations are applicable broadly for leave encashment liabilities. As gratuity liability accumulates due to service rendered by the employees during the year. This liability also increases on account of following reasons listed below:

  • Increase in salary
  • Time period of retirement gets reduces by 1 year
    There are other factors also, but not explained here.

An Actuary through actuarial valuation tries to estimate actuarial present value of accrued gratuity normally payable on retirement by using appropriate discount rate.

Gratuity is payable on exit after 5 years of service, actuarial valuation takes care of this contingency also with the help of attrition rates.

Finally gratuity is payable on death also irrespective of length of past service. Actuary during actuarial valuation applies appropriate mortality rates to provide for financial effect of likelihood of earlier payment on death of an employee

It should be appreciated that actuarial liability which will be arrived through actuarial valuation will increase on decreasing discount rate and increasing salary growth rate and vice versa.