What Are the Actual Deferral Percentage (ADP) & Actual Contribution Percentage (ACP) Tests? The Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests are two tests that companies must conduct to ensure that their 401(k) plans don’t unfairly benefit highly-paid employees at the expense of others. Companies that offer 401(k) plans must conduct the tests
What is an Actual Owner An Actual Owner is a person or entity that receives the benefit of ownership. Being the actual owner, the asset is under the person’s or entity’s name, and they are entitled to any advantage from that. The actual owner can be hard to determine at times if there are multiple
What Is an Actual Return? An actual return refers to the actual gain or loss an investor experiences on an investment or in a portfolio. It is also referred to as the internal rate of return (IRR). It can greatly affect net worth. The Basics of Actual Return As opposed to expected or assumed returns
What Is an Actuarial Adjustment? An actuarial adjustment refers to a revision made to capital reserves, premiums, benefit payments, or other values companies determine, based on one or more changes to actuarial assumptions. Actuarial assumptions are estimates and predictions of unknown variables, such as the age at which a person is likely to die, considering
What Is Actuarial Analysis? Actuarial analysis is a type of asset to liability analysis used by financial companies to ensure they have the funds to pay the required liabilities. Insurance and retirement investment products are two common financial products in which actuarial analysis is needed. Key Takeaways Actuarial analysis is a form of asset-to-liability analysis.This
What Is an Actuarial Consultant? The term actuarial consultant refers to a financial professional who advises clients on investment, insurance, and pension-related decisions using a variety of measurements. The consultant applies an extensive use of statistics, contingency plans, and large amounts of data to formulate a plan best suited to the client. They calculate and
What is an Actuarial Gain Or Loss? Actuarial gain or loss refers to an increase or a decrease in the projections used to value a corporation’s defined benefit pension plan obligations. The actuarial assumptions of a pension plan are directly affected by the discount rate used to calculate the present value of benefit payments and
What Is Actuarial Risk? Actuarial risk refers to the risk that the assumptions actuaries implement into models used to price specific insurance policies may prove to be inaccurate or wrong. Possible assumptions include the frequency of losses, the severity of losses, and the correlation of losses between contracts. Actuarial risk is also known as “insurance risk.” Key
What Is Actuarial Science? Actuarial science is a discipline that assesses financial risks in the insurance and finance fields, using mathematical and statistical methods. Actuarial science applies the mathematics of probability and statistics to define, analyze, and solve the financial implications of uncertain future events. Traditional actuarial science largely revolves around the analysis of mortality and the
What Is Actuarial Valuation? An actuarial valuation is a type of appraisal of a pension fund’s assets versus liabilities, using investment, economic, and demographic assumptions for the model to determine the funded status of a pension plan. The assumptions are based on a mix of statistical studies and experienced judgment. Since assumptions are often derived from
