Spot rate considerations for audits and lump-sum payouts

Pension plan sponsors are increasingly using the spot rate method to develop pension costs. Detailed attention is required when the method is applied to plans making lump-sum payments. At issue is a requirement by some auditors to use a certain approach and technique in application of the spot rate method for pension plans offering lump sums. In this article, Milliman’s Aeron Riordon explores its emerging usage as well as auditors’ preferred method considerations.

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