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DESCRIPTION OF VALUATION METHODS


GATT ACTUARIAL AND MORTALITY TABLES APPRAISAL

This approach is based upon the pension section of the General Agreement of Tariffs and Trade Act of 1994 (GATT). This method utilizes the interest rate for 30-Year U.S. Treasury Bonds and Group Annuity Mortality Tables. Present Value is determined as follows:
  1. Calculate the amount of the monthly pension benefit assuming the employee was of retirement age and eligible for a fully vested pension based upon compensation and plan provisions as of the Date the Marriage Ended.
  2. Group Annuity Mortality Tables are utilized to determine present value based upon the 30-Year U.S. Treasury Bond rate as of the Date of Valuation.
  3. The present value is reduced if the plan is not vested.
  4. If a portion of the pension was earned outside the marriage a coverture fraction is applied.

PBGC ACTUARIAL AND MORTALITY TABLES APPRAISAL

This approach is based upon information promulgated by the Pension Benefit Guaranty Corporation (PBGC), a U.S. Government Agency established by the Employee Retirement Income Security Act of 1974 (ERISA). PBGC administers insurance programs that guarantee the payment of retirement benefits to participants of private pension plans. Present Value is determined as follows:
  1. Calculate the amount of the monthly pension benefit assuming the employee was of retirement age and eligible for a fully vested pension based upon compensation and plan provisions as of the Date the Marriage Ended.
  2. The PBGC Mortality Tables (Group Annuity Mortality Tables ) and Interest Rates are utilized to determine the present value of the monthly pension benefit as of the Date of Valuation.
  3. The present value is reduced if the plan is not vested.
  4. If a portion of the pension was earned outside the marriage a coverture fraction is applied.

LIFE EXPECTANCY APPRAISAL

This approach is based upon Life Expectancy Tables derived from Group Annuity Mortality Tables and an interest rate index based upon AA Rated General Obligation Municipal Bonds. Present Value is determined as follows:
  1. Calculate the amount of the monthly pension benefit assuming the employee was of retirement age and eligible for a fully vested pension based upon compensation and plan provisions as of the Date the Marriage Ended.
  2. The employee's life expectancy at retirement age is ascertained to determine the expected number of months of pension benefits.
  3. The Municipal Bond index rate is used to determine the present value of the monthly benefit as of the Date of Valuation.
  4. The present value is then reduced for the probability that the employee would die before reaching retirement age.
  5. The present value is reduced if the plan has not vested.
  6. If a portion of the pension was earned outside the marriage a coverture fractionis applied.

GENERAL COMMENTS ABOUT THE DIFFERENT APPRAISAL METHODS

From an actuarial standpoint the use of mortality tables is preferable to the use of life expectancy tables. At the present time we default to the GATT Method which uses current mortality tables for males and females and the interest rate for 30-Year U.S. Treasury Bonds.