IN FOCUS
IN FOCUS 

BUDGET & PLANNING SEASON

 

 

It is budget season. The company, particularly the finance officers and department heads, is practically busy crunching numbers and pencil-pushing. Some items such as supplies are easy to budget given actual expenditures and the inflation forecast. Other items such as employee salaries come a little harder and with so much deliberation yet Management comes up with the right figures nonetheless.

 

Unfortunately there are items that can not be estimated without the aid of external experts. This includes the cost of long-term employee benefits, particularly the company's retirement program or what is mandated by law. By experience, actual retirement costs perennially exhibit big variation from the budget given that actuarial valuation is usually performed only after yearend.

 

In response, ActuarialExponents, Inc. in its efforts to provide the best quality of service to clients adds a preliminary actuarial valuation for budget purposes to the usual yearend valuation with a minimal additional cost. Contact us to get a proposal.     

 

Budget season is planning season too. In fact, the budget is done to support the plans for the succeeding year. Again, there are plans that are hard to cost such as the introduction of a retirement program or the amendment of an existing one. Without proper budgeting, there is a very slim chance for the plan to be carried out.

 

Of the ActuarialExponents' clients that attempted to set up or amend a retirement program this year, more than 80% did not push through because of budget constraints either that the program was improperly budgeted or no budget was provided at all. They thus have to wait for another year.

 

It should be noted that under current accounting standards, some components of the retirement cost can not be deferred. In other words, they are recognized immediately. Depending on the design of the program and the employee profile, this cost can be enormous and thus, becomes the most common constraint. 

This is thus the best time to conduct an actuarial study in time for the budget preparation. Contact us for a proposal.