With Governmental Accounting Standards Board (GASB) Statements 73, 74, and 75, new accounting rules for public postretirement benefit plans in the United States are set to take effect soon. Successful implementation of the new rules will require an understanding of a variety of technical concepts regarding the various newly required calculations. This PERiScope article, part of a miniseries on the new standards, discusses the individual entry age actuarial cost method for the valuation of Other Postemployment Benefits (OPEB).
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GASB 74/75: Calculation specifics on individual entry age normal
New regulations eliminate the option for actuaries to choose among cost methods used to calculate the liabilities of retirement plans for funding purposes and instead specify a single entry age approach, detailed in this article.