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Actuarial Valuations of Gratuity, Leave Encashment, Sick Leave, Pensions, Provident Fund, AS 15, AS 19, ESOP Valuations. Actuarial Consultancy in Life Insurance, General Insurance, and Pensions.

Actuarial Valuation in India
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Companies provide various Employee Benefits to their Employees. Some of them are statutory – like Gratuity, Pension, Provident Fund, Leave, etc. Since most of these benefits are paid in the future, it needs to be valued and provisioned for in the books of account. An Actuary performs Actuarial Valuations of these benefits and provides the liabilities that need to be disclosed in the books of account.

Kapadia Actuaries & Consultants (KAC) is known to be one of the leading firms in the Employee Benefits Valuation Industry in India. With our trained, dedicated & an experienced team of Actuaries and Actuarial Students, we have been providing timely & error-free Actuarial Valuation reports to more than 2000 clients across India for more than 40 years.

Gratuity

Gratuity is a statutory benefit payable to the employees by the companies. It is calculated as per the Payment of Gratuity Act, 1972. For companies, it is an open-ended liability and is calculated from the date of joining. The annual increase in the liability on gratuity increases for the company as the additional past service gratuity will increase with increased salary.

For employers, it is important & imperative to consider the impact of this on their annual liability and make provisions in the book of accounts in the P&L Account, failing which, the liability and the profits might be understated or overstated and also, the provisions of Accounting Standards may not be compiled.

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Gratuity
leave valuation

Leave

There are several types of leave benefit schemes offered by companies in India. These fall amongst the following categories:

  • Privilege Leave
  • Sick Leave
  • Casual Leave
  • Others

Actuarial Valuation of leave liability is considered under two circumstances:

Accumulating-Type

Accumulating Type

When the leaves are accrued by the employees while working with the company, wherein the unused leaves are carried forward to future years. They are mostly privilege leaves.

Vested-Type

Vested Type

When the leaves are accrued by the employees while working with the company, wherein the unused leaves are carried forward to future years. They are mostly privilege leaves.

Companies in India provide leave balance accumulation facility to their employees which they can either utilize or encash in future. This gives the vested right to the employees to receive a lump sum payment in lieu of leave balance standing to their credit.

Leave Accumulation is classified as a long-term benefit under the Revised Accounting Standard (AS 15) and does not require to publish a detailed disclosure in annual accounts.

Leaves such as sick leaves that cannot be carried forward do not need to undergo an actuarial valuation. However, it may still be required to make provision for them in the book of accounts vide other non-actuarial methods.

Companies require actuarial valuations of leave accumulation to prepare the financial statements at the end of every accounting period & during interim financial reporting.

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Pension Valuation

Pension

Our Actuarial Consulting on Pension is an integrated service we offer to SMEs & Corporate companies in India. We factor in the market and the economic regulatory parameters that affect the pensions schemes and provide a detailed assessment and consultation to enable them to manage their pension schemes efficiently & effectively.

With our comprehensive approach, we provide accurate valuation and also advise on Scheme Funding and Designing Investment Strategies, Risk Management & Corporate Transactions.

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PF

Employee Provident Fund is a defined contribution scheme, wherein, there's an equal contribution of a fixed sum to the Employee Provident Fund Organization from both, the employer and the employee. In case the provident funds have exempt status, the employer is responsible for the provision of benefits and must ensure that the fund earns at least equivalent to EPFO rate or more.

As actuarial consultants, we help our client make provision in the book of accounts for any probable and possible shortfalls in the funds and certify the sufficiency of funds.

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Provident Fund Valuation