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Common Misconceptions About Pension Plans

Published: Jan 01, 1982. Publicly Released: Jan 01, 1982.
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Highlights

This article, which appeared in the GAO Review, Vol. 17, Issue 2, Spring 1982, discusses several misconceptions about pension plans. There are a variety of acceptable actuarial assumptions, methods, and different maintenance periods to assess pension liabilities. Various methods other than the accrued benefit actuarial cost method may be used to express pension plan costs. Economic assumptions applicable to actuarial statistics change frequently. Past data cannot always lead to accurate projections of the future. The interest rate used in an actuarial valuation must discount liabilities for a long period. Computerized results of an actuarial calculation are not always instantaneous. Almost all pension plans have pension funds where accounts are unallocated.

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