Froogled By:: Elias Makere, FSA, MAAA
Last Froogled:: 8/27/2025

ASOP 4 | §3.19 | IMPLICATIONS OF CONTRIBUTION ALLOCATION PROCEDURE OR FUNDING POLICY

When performing a funding valuation, the actuary should do the following:

a. qualitatively assess the implications of the contribution allocation procedure or the plan’s funding policy on the plan’s expected future contributions and funded status;

b. estimate how long before any contribution as determined by the contribution allocation procedure or the plan’s funding policy is expected to exceed the normal cost, plus interest on the unfunded actuarial accrued liability, if applicable;

c. estimate the period over which the unfunded actuarial accrued liability, if any, is expected to be fully amortized; and

d. assess whether the contribution allocation procedure or funding policy is significantly inconsistent with the plan accumulating assets adequate to make benefit payments when due, and estimate the approximate time until assets are depleted.

For purposes of this section, contributions set by law or by a contract, such as a collective bargaining agreement, constitute a funding policy.

For purposes of this section, the actuary may presume that all assumptions will be realized and the plan sponsor (or other contributing entity) will make contributions anticipated by the contribution allocation procedure or funding policy.

ASOP 4 | Commentary Section 3.19 | COMMENT ON SECTION 3.19

Section 3.19, Implications of Contribution Allocation Procedure or Funding Policy
Comment	Response
One commentator felt the disclosure contemplated in section 3.19(b) should not be required as long as the contribution allocation procedure produces an expected contribution that exceeds normal cost plus interest on the unfunded.	The reviewers believe the guidance is appropriate and made no change. The reviewers note that the guidance states, “For purposes of this section, the actuary may presume that all assumptions will be realized and the plan sponsor (or other contributing entity) will make contributions anticipated by the contribution allocation procedure or funding policy.”
One commentator suggested alternative wording for paragraphs (b), (c), and (d) in section 3.19 to clarify that “contribution” refers to “plan's expected future contributions.”	The reviewers believe the guidance is appropriate and made no change. The reviewers note that the guidance states, “For purposes of this section, the actuary may presume that all assumptions will be realized and the plan sponsor (or other contributing entity) will make contributions anticipated by the contribution allocation procedure or funding policy.”

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ASOP 4 | §3.19 | IMPLICATIONS OF CONTRIBUTION ALLOCATION PROCEDURE OR FUNDING POLICY

ASOP 4 | Commentary Section 3.19 | COMMENT ON SECTION 3.19

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