IAS 19 parameter analysis

Accurate and more justifiable assumptions. This is the goal of the parameter analysis. It provides an analysis of the assumptions used in the IAS 19 valuation.

PRI helps client companies with IAS 19 valuation of the pension liability. The valuation is based on a handful of assumptions. Assumptions regarding a discount rate and inflation are dependent on, and are updated in pace with, market changes. The parameter analysis provides an improved basis for making decisions even for other assumptions - salary increases, departure intensity and life expectancy.

Increased demands from auditors and the stock exchange

The reason is that external forces, including auditors and the stock exchange, have shown an ever-increasing interest in these assumptions. This means that demands on the companies increase with respect to explaining and defending the valuation of pension assumptions. Therefore, we have created an analysis in which these assumptions are highlighted. This makes the assumptions more reasoned and makes the liability evaluation more accurate.

Provides assumptions based on company-specific data

In respect of salary increases, departure intensity and life expectancy assumptions, customer-unique analysis is conducted based on the company’s historical data. For example, we see a clear connection between increased age, declining salary increases and changes in the departure intensity. This means that many companies need to review their assumptions. The analysis need not be conducted annually, but perhaps every third or fourth year.