In this course we first look at how commutation functions are developed:

Actuarial Mathematics – Development of Commutation Functions

And provide some examples of how commutation functions are used to determine the value of simple annuity and life insurance products and their premiums under deterministic assumptions of survival and constant & level rates of return:

Actuarial Mathematics – Introduction to Commutation Functions

These functions also aid the determination of actuarial liability and current service cost of post employment defined benefit plans by providing an easy way of present valuing, PV-ing,  benefit payments. 

Our next posts address the Actuarial Valuation of Post-Employment Benefits, where we first consider the general process flow of valuing defined benefit gratuity and pension plans:

Gratuity and Pension Actuarial Valuation Process Flow

This is followed by an example illustrating the valuation of actuarial liability and normal cost for a single employee’s benefit in a simplified gratuity defined benefit plan:

Gratuity Valuation – A Simple Example: Liability Calculations – Defined Benefit Plan

The course also provides an illustration of how IAS 19 disclosures are prepared:

Gratuity Valuation: IAS 19 Disclosures: Simple Example Continued

It also includes an example of how sensitivity analysis of key assumptions is carried out:

Gratuity Valuation – A Simple Example Continued – Sensitivity Analysis

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