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Decision Making Under Conflicting Criteria In Pension Valuations: An Expected Utility Model, Lisa Lipowski Posey, Arnold F. Shapiro
Decision Making Under Conflicting Criteria In Pension Valuations: An Expected Utility Model, Lisa Lipowski Posey, Arnold F. Shapiro
Journal of Actuarial Practice (1993-2006)
Many of the criteria used by actuaries when selecting assumptions for pension plan valuations often conflict. As a result, actuaries must weigh the various costs and benefits associated with a particular set of assumptions. We use expected utility theory to model the process of chOOSing actuarial assumptions when faced with potentially conflicting criteria. The three criteria considered are prudence, best estimate, and conservatism. The actual contribution chosen by the actuary is found to depend on the contribution level that triggers a red flag with respect to tax deductibility. If this level is relatively low, the actuary chooses a high contribution …
The Small Plan Audit Program: The Opinions Of The Court, Arnold F. Shapiro
The Small Plan Audit Program: The Opinions Of The Court, Arnold F. Shapiro
Journal of Actuarial Practice (1993-2006)
One of the most important issues of recent years from the perspective of many pension actuaries is the IRS's small plan audit program. The program initially was expected to raise two-thirds of a billion dollars by targeting well-funded defined benefit plans with five or fewer participants. The focus of the audit was the assumed interest rate and the normal retirement age, both of which the IRS generally regarded as too low. While the focus of the audit was relatively narrow, the issue it raised was a funda mental one. The basic question was the extent to which the IRS could …