The following illustrations address the measurement, assignment and allocation of pension cost on or after the Applicability Date of the CAS Harmonization Rule. The illustrations present the measurement, assignment and allocation of pension cost for a contractor that separately computes pension costs by segment or aggregation of segments. The actuarial gain and loss recognition of changes between measurements based on the actuarial accrued liability, determined without regard to the provisions of 9904.412-50(b)7) and the minimum actuarial liability are illustrated in 9904.412-60.1(d). The structural format for 9904.412.60.1 differs from the format for 9904.412-60.
Table 1-January 1, 2017, Market Value of Assets
Total plan | Segment 1 | Segments 2 through 7 | Accumulated prepayments | Note | |
Market Value of Assets | $14,257,880 | $1,693,155 | $11,904,328 | $660,397 | 1 |
Note 1: Information taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation.
Table 2-January 1, 2017, Actuarial Value of Assets
Total plan | Segment 1 | Segments 2 through 7 | Accumulated prepayments | Note | |
Market Value at January 1, 2017 | $14,257,880 | $1,693,155 | $11,904,328 | $660,397 | 1 |
Total Deferred Appreciation | (37,537) | (4,398) | (31,400) | (1.739) | 2 |
Unlimited Actuarial Value of Assets | 14,220,343 | 1,688,757 | 11,872,928 | 658,658 | |
CAS 413 Asset Corridor 80% of Market Value of Assets | 11,406,304 | 1,354,524 | 9,523,462 | 528,318 | |
Market Value at January 1, 2017 | 14,257,880 | 1,693,155 | 11,904,328 | 660,397 | 1 |
120% of Market Value of Assets | 17,109,456 | 2,031,786 | 14,285,194 | 792,476 | |
CAS Actuarial Value of Assets | 14,220,343 | 1,688,757 | 11,872,928 | 658,658 | 3, 4 |
Note 1: See Table 1.
Note 2: Information taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation.
Note 3: CAS Actuarial Value of Assets cannot be less than 80% of Market Value of Assets or more than 120% of Market Value of Assets.
Note 4: The Actuarial Value of Assets are used in determination of any Unfunded Actuarial Liability or Unfunded Actuarial Surplus regardless of whether the liability is based on the actuarial accrued liability measured without regard to 9904.412-50(b)(7) or minimum actuarial liability measured in accordance with 9904.412-50(b)(7).
Table 3-Actuarial Accrued Liabilities and Normal Costs as of January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
Actuarial Accrued Liability (AAL) | $16,325,000 | $2,100,000 | $14,225,000 | 1 |
Normal Cost | 910,700 | 89,100 | 821,600 | 1 |
Expense Load on Normal Cost | 1, 2 |
Note 1: Information taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation. The actuarial accrued liability and normal cost are computed using the assumed interest rate in accordance with 9904.412-40(b)(2) and 9904.412.50(b)(4).
Note 2: Expected administrative expenses are implicitly recognized as part of the assumed interest rate.
Table 4-Minimum Actuarial Liabilities and Minimum Normal Costs as of January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
Minimum Actuarial Liability | $16,636,000 | $2,594,000 | $14,042,000 | 1 |
Minimum Normal Cost | 942,700 | 102,000 | 840,700 | 1 |
Expense Load on Minimum Normal Cost | 82,000 | 8,840 | 73,160 | 1, 2 |
Note 1: Plan level information taken directly from the actuarial valuation report prepared for ERISA purposes and supporting documentation and equals the sum of the data for the segments. Data for the segments is taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation.
Note 2: Anticipated annual administrative expenses are separately recognized as an incremental component of minimum normal cost in accordance with 9904.412-50(b)(7)(ii)(B).
Table 5-CAS Pension Harmonization Test at January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | (Note 2) | (Note 2) | ||
"Going Concern" Liability for Period: | 3 | |||
Actuarial Accrued Liability | $2,100,000 | $14,225,000 | 4 | |
Normal Cost | 89,100 | 821,600 | 4 | |
Expense Load on Normal Cost | 4, 5 | |||
Total Liability for Period | 2,189,100 | 15,046,600 | ||
Minimum Liability for Period: | ||||
Minimum Actuarial Liability | 2,594,000 | 14,042,000 | 6 | |
Minimum Normal Cost | 102,000 | 840,700 | 6 | |
Expense Load on Minimum Normal Cost | 8,840 | 73,160 | 6, 7 | |
Total Minimum Liability for Period | 2,704,840 | 14,955,860 |
Note 1: Because the contractor determines pension costs separately for Segment 1 and Segments 2 through 7, the data for the Total Plan is not needed for purposes of the 9904.412-50(b)(7)(i) determination.
Note 2: Because the contractor determines pension cost separately for Segment 1 and Segments 2 through 7, the 9904.412-50(b)(7) CAS Pension Harmonization test is applied at the segment level to determine the larger of the Total Liability for Period or the Total Minimum Liability for Period. For Segment 1, the larger Total Minimum Liability for Period determines the measurement basis for the liability and normal cost. For Segments 2 through 7, the larger Total Liability for Period determines the measurement basis for the liability and normal cost.
Note 3: The actuarial accrued liability and normal cost plus any expense load are computed using interest assumptions based on long-term expectations in accordance with 9904.412-40(b)(2) and 9904.412-50(b)(4). For purposes of Illustration 9904.412-60.1(b), the sum of these amounts are referred to as the "Going Concern" Liability for the Period.
Note 4: See Table 3.
Note 5: Because the contractor's assumed interest rate implicitly recognizes expected administrative expenses there is no explicit amount added to the normal cost.
Note 6: See Table 4.
Note 7: The contractor explicitly identifies the expected expenses as a separate component of the minimum normal cost, as required by 9904.412-50(b)(7)(ii)(B).
Table 6-Unfunded Actuarial Liability as of January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Actuarial Accrued Liability | $16,819,000 | $ 2,594,000 | $14,225,000 | 2 |
CAS Actuarial Value of Assets | (13,561,685) | (1,688,757) | (11,872,928) | 3 |
Unfunded Actuarial Liability | 3,257,315 | 905,243 | 2,352,072 |
Note 1: Because the contractor determines pensions separately for Segment 1 and Segments 2 through 7, the values are the sum of the values for Segment 1 and Segments 2 through 7.
Note 2: For Segment 1, the actuarial accrued liability is measured by the accrued benefit cost method as required by 9904.412-50(b)(7), i.e., the minimum actuarial liability as described in 9904.412-50(b)(7)(ii). See Table 4. For Segments 2 through 7, the actuarial accrued liability is measured by the projected unit credit cost method, which is the contractor's established actuarial cost method since these the 9904.412-50(b)(7)(i) criterion was not met for these segments. See Table 3.
Note 3: See Table 2. The CAS Actuarial Value of Assets is used regardless of the basis for determining the liabilities. The CAS Actuarial Value of Assets allocated to Segment 1 and Segments 2 through 7 excludes the accumulated value of prepayment credits as required by 9904.412-50(a)(4).
Table 7-Measurement of Pension Cost at January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Normal Cost | $ 102,000 | $821,600 | 2 | |
Expense Load on Normal Cost | 8,840 | 2, 3 | ||
Amortization Installments | 140,900 | 366,097 | 4 | |
Measured Pension Cost | 1,439,437 | 251,740 | 1,187,697 |
Note 1: Because the contractor separately computes pension cost for Segment 1 and Segments 2 through 7, only the total pension cost is shown.
Note 2: For Segment 1, the normal cost is measured by the accrued benefit cost method as required by 9904.412-50(b)(7), i.e., the minimum normal cost as described in 9904.412-50(b)(7)(ii). See Table 4. For Segments 2 through 7, the normal cost is measured by the contractor's established immediate gain cost method since these the 9904.412-50(b)(7)(i) criterion was not met for these segments. See Table 3.
Note 3: Because the criterion of 9904.412-50(b)(7)(i) was met for Segment 1, the Normal Cost is measured by the Minimum Normal Cost, which explicitly identifies the expected expenses as a separate component of the minimum normal cost in accordance with 9904.412-50(b)(7)(ii)(B). See Table 4. For Segments 2 through 7, the normal cost is measured by the contractor's established immediate gain cost method, which implicitly recognizes expenses as a decrement to expected assumed interest rate, since the 9904.412-50(b)(7)(i) criterion was not met for these segments. See Table 3.
Note 4: Net amortization installment based on the unfunded actuarial liability of $3,257,315 ($905,243 for Segment 1, and $2,352,072 for Segments 2 through 7) and the contractor's assumed interest rate in compliance with 9904.412-40(b)(2) and 9904.412-50(b)(4). See Table 6.
Table 8-CAS 412-50(c)(2)(i) Zero Dollar Floor as of January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Measured Pension Cost [GREATER THAN EQUAL TO]$0 | $251,740 | $1,187,697 | 2 | |
Assignable Cost Credit | 3 |
Note 1: Because the provisions of CAS 412-50(c)(2)(i) are applied at the segment level, no values are shown for the Total Plan.
Note 2: See Table 7. The Assignable Pension Cost in accordance with 9904.412-50(c)(2)(i) is the greater of zero or the Harmonized Pension Cost.
Note 3: There is no Assignable Cost Credit since the Measured Pension Cost is greater than zero.
Table 9-CAS 412-50(c)(2)(ii) Assignable Cost Limitation as of January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Actuarial Accrued Liability | $2,594,000 | $14,225,000 | 2 | |
Normal Cost | 102,000 | 821,600 | 3 | |
Expense Load on Normal Cost | 8,840 | 4 | ||
Total Liability for Period | $2,704,840 | $15,046,600 | ||
CAS Actuarial Value of Plan Assets | (1,688,757) | (11,872,928) | 5 | |
(A) Assignable Cost Limitation Amount | $1,016,083 | $3,173,672 | 6 | |
(B) 412-50(c)(2)(i) Assigned Cost | $251,740 | $1,187,697 | 7 | |
(C) 412-50(c)(2)(ii) Assigned Cost | $1,439,437 | $251,740 | $1,187,697 | 8 |
Note 1: Because the assignable cost limitation is applied at the segment level when pension costs are separately calculated by segment or aggregation of segments, no values are shown for the Total Plan other than the Assigned Cost after consideration of the Assignable Cost Limit.
Note 2: For Segment 1, the actuarial accrued liability is measured by the accrued benefit cost method as required by 9904.412-50(b)(7), i.e., the minimum actuarial liability as described in 9904.412-50(b)(7)(ii)(A). See Table 4. For Segments 2 through 7, the actuarial accrued liability is measured by the contractor's established immediate gain cost method since these the 9904.412-50(b)(7)(i) criterion was not met for these segments. See Table 3.
Note 3: For Segment 1, the normal cost is measured by the accrued benefit cost method as required by 9904.412-50(b)(7), i.e., the minimum normal cost as described in 9904.412-50(b)(7)(ii)(B). See Table 4. For Segments 2 through 7, the normal cost is measured by the contractor's established immediate gain cost method since these the 9904.412-50(b)(7)(i) criterion was not met for these segments. See Table 3.
Note 4: For Segment 1, the normal cost is measured by the accrued benefit cost method as required by 9904.412-50(b)(7), i.e., the minimum normal cost as described in 9904.412-50(b)(7)(ii)(B), which explicitly identifies the expected expenses as a separate component of the minimum normal cost. See Table 4. For Segments 2 through 7, the normal cost is measured by the contractor's established immediate gain cost method, which implicitly recognizes expenses as a decrement to the assumed interest rate since these the 9904.412-50(b)(7)(i) criterion was not met for these segments. See Table 3.
Note 5: See Table 2. The CAS Actuarial Value of Assets is used regardless of the basis for determining the liabilities. The CAS Actuarial Value of Assets allocated to Segment 1 and Segments 2 through 7 excludes the accumulated value of prepayment credits as required by 9904.412-50(a)(4).
Note 6: The Assignable Cost Limitation cannot be less than $0.
Note 7: See Illustration 9904.412-60.1(c)(1), Table 8.
Note 8: Lesser of lines (A) or (B).
Table 10-CAS 412-50(c)(2)(iii) Tax-Deductible Limitation as of January 1, 2017
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
Maximum Tax-deductible Amount | $15,014,300 | $2,625,818 | $12,388,482 | 1, 2 |
Accumulated Prepayment Credits | 660,397 | 115,495 | 544,902 | 3, 4 |
(A) 412-50(c)(2)(iii) Limitation | $15,674,697 | $2,741,313 | $12,933,384 | |
(B) 412-50(c)(2)(ii) Assigned Cost | $1,439,437 | $251,740 | $1,187,697 | 5 |
Assigned Pension Cost | $1,439,437 | $251,740 | $1,187,697 | 6 |
Note 1: The Maximum Deductible Amount for the Total Plan is obtained from the valuation report prepared for ERISA purposes.
Note 2: The Maximum Tax-deductible Amount for the Total Plan is allocated to segments based on the assigned cost after application of 9904.412-50(c)(2)(ii) in accordance with 9904.413-50(c)(1)(i) for purposes of this assignment limitation test.
Note 3: The Accumulated Prepayment Credits for the Total Plan are allocated to segments based on the assigned cost after application of 9904.412-50(c)(2)(ii) in accordance with 9904.413-50(c)(1)(i) for purposes of this assignment limitation test.
Note 4: See Table 1.
Note 5: See Table 9.
Note 6: Lesser of lines (A) or (B).
Table 11-Summary of Liabilities for Segment 1 as of January 1
2016 | 2017 | 2018 | Notes | |
"Going Concern" Liabilities for the Period: | ||||
Actuarial Accrued Liability | $1,915,000 | $2,100,000 | $2,305,000 | 1 |
Normal Cost | 89,600 | 89,100 | 99,500 | 1 |
Expense Load on Normal Cost | 1, 2 | |||
Total Liability for Period | $2,004,600 | $2,189,100 | $2,404,500 | |
Minimum Liabilities for the Period: | ||||
Minimum Actuarial Liability | $1,901,000 | $2,594,000 | $2,212,000 | 3 |
Minimum Normal Cost | 83,800 | 102,000 | 96,500 | 3 |
Expense Load on Minimum Normal Cost | 8,300 | 8,840 | 9,300 | 3, 4 |
Total Minimum Liability for Period | $1,993,100 | $2,704,840 | $2,317,800 | |
Interest Basis as Determined by Segment's Liabilities for Period | 9904.412-50(b)(4) | 9904.412-50(b)(7)(iii) | 9904.412-50(b)(4) | 5 |
Note 1: See Table 3 for 2017 values. For 2016 and 2018, the data for Segment 1 is taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation, including subtotals of the data by segment.
Note 2: Because the contractor's interest assumption, which satisfies the requirements of 9904.412-40(b)(2) and 9904.412-50(b)(4), implicitly recognizes expected administrative expenses there is no explicit amount shown for the normal cost.
Note 3: See Table 4 for 2017 values. For 2016 and 2018, the data for Segment 1 is taken directly from the actuarial valuation report prepared for ERISA purposes and supporting documentation, including subtotals of the data by segment. The values for 2016 are based on the transitional minimum actuarial liability and transitional minimum normal cost measured in accordance with 9904.412-64.1(a) and (b).
Note 4: For purposes of determining minimum normal cost, the contractor explicitly identifies the expected administrative expense as a separate component as required by 9904.412-50(b)(7)(ii)(B).
Note 5: For determining the pension cost for the period, the measurements are based on the actuarial accrued liability and normal cost unless the total minimum liability for the period exceeds the "Going Concern" total liability for the period. The measurement basis was separately determined for each segment in accordance with 9904.412-50(b)(7)(i).
Table 12-Unfunded Actuarial Liability for Segment 1 as of January 1
2016 | 2017 | 2018 | Notes | |
Current Year Actuarial Liability Basis | 9904.412-50(b)(4) | 9904.412-50(b)(7)(iii) | 9904.412-50(b)(4) | 1 |
Actuarial Accrued Liability | $1,915,000 | $2,594,000 | $2,305,000 | 1 |
CAS Actuarial Value of Assets | (1,500,000) | (1,688,757) | (1,894,486) | 2 |
Unfunded Actuarial Liability (Actual) | $415,000 | $905,243 | $410,514 |
Note 1: See Table 11.
Note 2: The 2017 CAS Actuarial Value of Assets is developed in Table 2. For 2016 and 2018, the Actuarial Value of Assets for Segment 1 is taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation.
Table 13-Measurement of Actuarial Gain or Loss for Segment 1 as of January 1
2016 | 2017 | 2018 | Notes | |
Actual Unfunded Actuarial Liability | (Note 1) | $905,243 | $410,514 | 2 |
Expected Unfunded Actuarial Liability | (381,455) | (848,210) | 3 | |
Actuarial Loss (Gain) | $523,788 | $(437,696) |
Note 1: The determination of the actuarial gain or loss that occurred during 2015 and measured on 2016 is outside the scope of this Illustration.
Note 2: See Table 12.
Note 3: Information taken directly from the actuarial valuation report prepared for CAS 412 and 413 purposes and supporting documentation. The expected unfunded actuarial liability is based on the prior unfunded actuarial liability updated based on the assumed interest rate in compliance with 9904.412-40(b)(2) and 9904.412-50(b)(4). Note that in accordance with 9904.412-50(b)(7)(iii)(D), the corporate bond yield rate is only used to determine the minimum actuarial liability but not to adjust the liability for the passage of time.
48 C.F.R. §§9904.412-60.1