CALCULATION OF NORMAL CONTRIBUTION, ACTUARIAL LIABILITY, AND ACCUMULATION NORMAL CONTRIBUTION USING PROJECTED UNIT CREDIT METHOD AND ENTRY AGE NORMAL METHOD

Abstract

Preparing retirement funds is very important in achieving financial security when entering retirement. Lack of financial preparation often causes financial difficulties during retirement. Therefore, the planning and management of periodic employee payments through the pension fund program includes the Normal Contribution and the Accumulation of Actuarial Liability Normal Contribution as part of the pension planning calculation. In the context of financing pension funds, two general methods are used to calculate pension obligations, namely the Projected Unit Credit (PUC) Method and the Normal Entry Age (EAN) Method. The Projected Unit Credit (PUC) method considers the participant's length of service and salary growth. Meanwhile, the Entry Age Normal Method (EAN) calculates pension obligations based on the age of participating in the pension program. This second method has a different approach and provides other benefits for both participants. The calculation results show that the Normal Contribution value using the Normal Entry Age method remains constant yearly. In contrast to the Projected Unit Credit method, this value increases with length of service. Actuarial liability values using the Entry Age Normal and Projected Unit Credit methods increase as years of service increase, with a more significant increase in the EAN method occurring in the middle of the year. The Normal Entry Age method is more profitable because it provides stability and predictability in financial planning. On the other hand, the Projected Unit Credit Method can be increasingly burdensome for participants due to the increase in Normal Contributions from year to year.