Actuarial Exponents Inc - VisMin

05/06/2025

What is a PAS 19 / IAS 19 Valuation?

A PAS 19 or IAS 19 valuation refers to a valuation conducted under Philippine Accounting Standard (PAS) 19: Employee Benefits or International Accounting Standard (IAS) 19: Employee Benefits. This standard governs the accounting and reporting of employee benefits by employers, including:

- Short-term benefits (e.g., wages, bonuses)
- Post-employment benefits (e.g., pensions, retirement pay)
- Other long-term benefits (e.g., long service leave)
- Termination benefits

PAS 19 or IAS 19 Valuation — Key Points:
A PAS 19 or IAS 19 valuation is typically conducted by an actuary and involves calculating the present value of a company's obligations under employee benefit plans. The most common application is for defined benefit retirement plans, such as:

- Retirement benefit plans under the Philippine Retirement Pay Law (Republic Act 7641)
- Gratuity plans offered by employers

The Valuation Includes:

1. Projected Benefit Obligation (PBO): The estimated present value of future benefits employees have earned up to the valuation date.

2. Actuarial assumptions:
- Discount rate (based on government or corporate bond yields)
- Salary increase rate
- Employee turnover and mortality rates

3. Fair value of plan assets, if any

4. Service cost, interest cost, and actuarial gains/losses

Purpose of PAS 19 Valuation:

- For financial statement disclosures (usually required annually)
- To comply with auditor and regulator requirements
- For budgeting and funding employee benefit obligations

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11/03/2025

What is an Actuarial Valuation?

An actuarial valuation is an assessment conducted by an actuary to estimate the financial obligations of a company or organization, typically related to pensions, insurance, or other employee benefits. The goal is to determine whether sufficient funds are available to meet future liabilities.

Key Aspects of Actuarial Valuation:
Liability Estimation – Calculates the present value of future benefits owed to employees or policyholders.
Assumptions Used – Factors in economic (e.g., discount rates, inflation) and demographic (e.g., mortality, retirement age) assumptions.
Funded Status – Compares assets (if any) set aside to cover liabilities.
Regulatory Compliance – Ensures adherence to accounting and regulatory standards like IFRS, GAAP, or local pension laws.
Risk Assessment – Identifies financial risks related to future payments.

Common Applications:
Pension Plans – Determines employer contributions and whether the plan is adequately funded.
Insurance Companies – Estimates reserves needed for claims.
Employee Benefits – Valuations for gratuity, post-retirement benefits, etc.

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23/10/2024

Maximizing Tax Incentives Briefing on RMC 2013-24.
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