Hi there The DABM method- am I correct in thinking that as under this method you assume all actives leave on v-date and give them revaluation rate increases to NRA, this method is less prudent than the AAM and PUM, as they target a fund with salary increases to NRA. Also when you come to do the next valuation your Actuarial liability (i.e. Past service reserve as at last V-date excluding accrual between valuations) would increase as salary increases are likely to be higher than revaluation increases which would lead to a deficit! I'm a bit confused- i cant think why you would use the DABM for scheme which is open to future accrual. Finally how would the SCR be calculated? Would you use PUM?
The Defined Accrued Benefit method is used to model the costs on the winding-up of a scheme. The benefits valued are those members would be entitled to on discontinuance of the scheme - there is no further accrual of benefits. Statutory revaluation (or greater) is awarded. There is no SCR as such as there is no further accrual of benefits. The only contributions which may be needed are those to meet the cost of the discontinuance benefits over and above the assets currently held. This method is used just to give a snapshot of the solvency position of the scheme really and not as a method to base a funding strategy on.
