New accounting rules for public pension plans in the United States are set to take effect beginning in 2014. This PERiScope
article in the Governmental Accounting Standards Board (GASB) Statements No. 67 and 68 miniseries discusses the individual entry age (IEA) actuarial cost method. The IEA cost method is specifically identified in the new standards as the only appropriate method for determining a plan’s total pension liability (TPL), which is the portion of the present value of benefits attributable to past service. This article will also discuss the calculation of the amortization period to be utilized in recognizing gains or losses that are due to demographic experience or actuarial assumption changes in the annual expense under GASB 68.