In researching an issue this week, we stumbled across an article titled, The Anatomy of a Lump-Sum Conversion, written by Corey Swarner, CPC, MBA of Milliman.
In various posts, we've attempted to provide readers with an understanding of how actuarial math including the time-value of money, and actuarial concepts such as life expectancy. But we think Corey really nailed it, and wanted to share his article, which you can read here:
We this this article nicely describes how an actuary calculates an actuarial present value, which is used for lump-sum distributions as well as determining contributions and a defined benefit plan funded ratio. Enjoy!