Contractors or subcontractors that become subject to the Standard, as amended, during the Pension Harmonization Transition Period shall recognize the change in cost accounting method in accordance with paragraphs (a) and (b).
Table 1-Development of Transitional Minimum Actuarial Liability for Fourth Transition Period
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Minimum Actuarial Liability | $2,594,000 (2,100,000) | $14,042,000 (14,225,000) | 2 3 | |
Actuarial Accrued Liability | (2,100,000) | (14,225,000) | ||
Actuarial Accrued Liability Difference | $494,000 | $(183,000) | 4 | |
Phase In Percentage (Period 4) | 75% | 75% | 5 | |
Phase In Liability Difference | $370,500 | $(137,250) | 6 | |
Actuarial Accrued Liability | 2,100,000 | 14,225,000 | 6 | |
Transitional Minimum: | ||||
Actuarial Liability | $2,470,500 | $14,087,750 |
Note 1: The values for the Total Plan are not shown because the 9904.412-50(b)(7)(i) threshold criterion is applied separately for each segment.
Note 2: See Illustration 9904.412-60.1(b)(2)(ii), Table 4.
Note 3: See Illustration 9904.412-60.1(b)(2)(i), Table 3.
Note 4: The phase in percentage will be applied to positive or negative differences in the actuarial liabilities, since the purpose of the phase in is to incrementally move the measurement away from the actuarial accrued liability to the minimum actuarial liability, regardless of the direction of the movement.
Note 5: Appropriate transition percentage for the Fourth Cost Accounting Period of the Pension Harmonization Rule Transition Period as stipulated in 9904.412-64.1(b)(3).
Note 6: The actuarial accrued liability is adjusted by the phase in difference between liabilities, either positive or negative, in accordance with 9904.412-64.1(b)(2).
Table 2-Development of Transitional Minimum Normal Cost for Fourth Transition Period
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Minimum Normal Cost | $102,000 | $840,700 | 2 | |
Expense Load on Normal Cost | 8,840 | 73,160 | 2, 3 | |
Minimum Normal Cost Plus Expense Load | $110,840 | $913,860 | 2 | |
Normal Cost Plus Expense Load | (89,100) | (821,600) | 4 | |
Difference | $21,740 | $92,260 | 5 | |
Phase In Percentage (Period 4) | 75% | 75% | 6 | |
Phase In Normal Cost Difference | $16,305 | $69,195 | 7 | |
Normal Cost Plus Expense Load | 89,100 | 821,600 | 7 | |
Transitional Minimum: | ||||
Normal Cost Plus Expense Load | $105,405 | $890,795 |
Note 1: The values for the Total Plan are not shown because the 9904.412-50(b)(7)(i) threshold criterion is applied separately for each segment.
Note 2: See Illustration 9904.412-60.1(b)(2)(ii), Table 4.
Note 3: For minimum normal cost valuation purposes, the contractor explicitly identifies the expected administrative expenses as a separate component of minimum normal cost.
Note 4: See Illustration 9904.412-60.1(b)(2)(i), Table 3. Expected expenses are implicitly recognized as part of the contractor's expected rate of return on investments assumption.
Note 5: The phase in percentage will be applied to positive and negative differences in the normal costs plus expense loads, since the purpose of the phase in is to incrementally move the measurement from the normal cost plus expense load, to the minimum normal cost plus expense load, regardless of the direction of the movement.
Note 6: Appropriate transition percentage for the Fourth Cost Accounting Period of the Pension Harmonization Rule Transition Period stipulated in 9904.412-64.1(b)(3).
Note 7: The sum of the normal cost plus expense load is adjusted by the phase in difference between normal costs, either positive or negative, in accordance with 9904.412-64.1(b)(2).
Table 3-Summary of Liability and Normal Cost Values for Fourth Transition Period
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
"Going Concern" Liabilities for Period: | ||||
Actuarial Accrued Liability | $2,100,000 | $14,225,000 | 2 | |
Normal Cost Plus Expense Load | 89,100 | 821,600 | 3 | |
Total Liability for Period | 2,189,100 | 15,046,600 | ||
Transitional Minimum Liabilities for the Period: | ||||
Transitional Minimum Actuarial Liability | 2,470,500 | 14,087,750 | 1 | |
Transitional Minimum Normal Cost Plus Expense Load | 105,405 | 890,795 | 3 | |
Total Transitional Minimum Liability for Period | 2,575,905 | 14,978,545 | 4 |
Note 1: The values for the Total Plan are not shown because the 9904.412-50(b)(7)(i) threshold criterion is applied separately for each segment.
Note 2: See Table 1.
Note 3: See Table 2.
Note 4: If the threshold criterion is met, then the pension cost for the period is measured based on the Transitional Minimum Actuarial Liability and Transition Normal Cost Plus Expense Load.
Table 4-Unfunded Actuarial Liability for Fourth Transition Period
Total Plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Actuarial Accrued Liability | $2,470,500 | $14,225,000 | 2 | |
CAS Actuarial Value of Assets | (1,688,757) | (11,872,928) | 3 | |
Unfunded Actuarial Liability | 781,743 | 2,352,072 |
Note 1: The values for the Total Plan are not shown because the 9904.412-50(b)(7)(i) threshold criterion is applied separately for each segment.
Note 2: Because the Pension Harmonization criterion of 9904.412-50(b)(7)(i) has been met for Segment 1, the actuarial accrued liability is measured by the transitional minimum actuarial liability as required by 9904.412-64.1(b)(4). See Table 3. Because the Pension Harmonization criterion of 9904.412-50(b)(7)(i) was not satisfied for Segments 2 through 7, the actuarial accrued liability is based on the actuarial assumptions that reflect long-term trends in accordance with 9904.412-50(b)(4), i.e., the transitional minimum actuarial liability does not apply.
Note 3: See Illustration 9904.412-60.1(b)(1)(ii), Table 2.
Table 5-Pension Cost for Fourth Transition Period
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Normal Cost Plus Expense Load | $105,405 | $821,600 | 2 | |
Amortization Installments | 101,990 | 314,437 | 3, 4 | |
Pension Cost Computed for the Period | 1,343,432 | 207,395 | 1,136,037 |
Note 1: Except for the Total Pension Cost Computed for the Period, the values for the Total Plan are not shown because the 9904.412-50(b)(7)(i) threshold criterion is applied separately for each segment.
Note 2: See Table 3. Because the Pension Harmonization criterion of 9904.412-50(b)(7)(i) has been met for Segment 1, the sum of the normal cost plus the expense load is measured by the sum of the transitional minimum normal cost plus the expense load, as required by 9904.412-64.1(a). Because the Pension Harmonization criterion of 9904.412-50(b)(7)(i) was not satisfied for Segments 2 through 7, the sum of the normal cost plus any applicable expense load is based on the contractor's actuarial assumptions reflecting long-term trends in accordance with 9904.412-40(b)(2) and 9904.412-50(b)(4), i.e., the transitional minimum normal cost plus the expense load does not apply.
Note 3: Net amortization installment based on the unfunded actuarial liability of $781,743 for Segment 1, and $2,352,072 for Segments 2 through 7, including an interest equivalent on the unamortized portion of such liability. See Table 4. The interest adjustment is based on the contractor's interest rate assumption in compliance with 9904.412-40(b)(2) and 9904.412-50(b)(4).
Note 4: See 9904.64-1(c)(4) for details concerning the recognition of the unfunded actuarial liability during the first Pension Harmonization Rule Transition Period.
Table 6-Computation of the Pension for the First Transition Period
Total plan | Segment 1 | Segments 2 through 7 | Notes | |
(Note 1) | ||||
Amortization of Unfunded Liability Net Amortization Installment from Prior Periods | $81,019 | $523,801 | 2 | |
January 1, 2013, Actuarial Loss (Gain) Amortization Installment | (9,369) | (68,740) | 3 | |
Net Amortization Installment | 71,650 | 455,061 | ||
Normal Cost plus expense load | 78,400 | 715,000 | 4 | |
Pension Cost Computed for the Period | 150,050 | 1,170,061 |
NOTE 1: The values for the Total Plan are not shown because the 9904.412-50(b)(7)(i) threshold criterion is applied separately for each segment.
NOTE 2: Amortization installments of actuarial gains and losses, and other portions of the unfunded actuarial liability identified prior to January 1, 2013, in accordance with 9904.412-50(a)(1)(v) and 9904.413-50(b)(2)(ii), including an interest adjustment based on the contractor's long-term interest assumption in compliance with 9904.412-40(b)(2) and 9904.412-50(b)(4).
NOTE 3: The actuarial gains for both Segment 1, and Segments 2 through 7, as measured as of January 1, 2013, are amortized over a ten-year period in accordance with 9904.413-50(a)(2)(ii) and 9904.412-64-1(b)(4). Note that although the source of the actuarial gains was the deviation between assumed and actual changes during the prior period, the gain is measured on January 1, 2013, and so the ten-year amortization period applies in the current period, including an interest adjustment based on the contractor's long-term interest assumption in compliance with 9904.412-40(b)(2) and 9904.412-50(b)(4).
NOTE 4: For the first period of the Pension Harmonization Rule transition period, the adjustment to the sum of the actuarial accrued liability and normal cost is adjusted by $0. Therefore the sum of the transitional minimum actuarial liability and transitional minimum normal cost plus expense load is equal to the sum of the actuarial accrued liability and normal cost plus expense load, and the criterion of 9904.412-50(b)(7)(i) was not met for either Segment 1, or Segments 2 through 7. The sum of the normal cost plus expense load is based on the sum of the going concern normal cost plus expense load.
48 C.F.R. §§9904.412-64.1