Actuarial Valuation of Gratuity, Health Care and Pension Benefits

Ind AS 19 or AS 15 reporting made simple and easy with Lux

In India, companies are working towards meeting global best practice standards as set out in the International Financial Reporting Standards (IFRS). The Ministry of Corporate Affairs requires companies to implement Indian Accounting Standard and thus, they need to report thier employee benefit liability under the new standard Ind AS 19, which replaces the previous AS 15.

Ind AS 19 requires a re-measurement of long-term employee benefits and their corresponding liabilities. Such benefits include Gratuity Benefits, Annual Leave Encashment, Health Care or Pension benefits, which must be valued, validated and certified by an actuary.

 

How to comply with Ind AS 19 / AS 15

What is an Ind AS 19  or AS 15 actuarial valuation?

An actuarial valuation is an assessment of a company’s current and future liabilities using an agreed set of financial and demographic assumptions that are based on the actuary’s best estimates, preferably supported by historical data.

An actuarial valuation requires skilled personnel, both in qualification and in specific experience and application, to meet the stringent reporting requirements.

 

Lux Actuaries & Analytics LLP, is best placed to perform this task

As employee benefit specialists our proven approach means we:

  • >
    collect, reconcile and validate employee payroll data,
  • >
    engage with your team to set the valuation basis,
  • >
    calculate the actuarial cost of liabilities,
  • >
    conclude and make recommendations,
  • >
    present an extensive actuarial report within one working day
FAQs

Find out how to comply with Ind AS 19
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FAQs
What is Ind AS 19?
What is an Ind AS 19 actuarial valuation?
Why does this information need to be disclosed?
Does Ind AS 19 apply to all countries and companies?
How does the process work?
What does the report include?
How can Lux make your work as HR or Finance Director easier?
How do I apply?
What are the advantages of conducting an actuarial valuation?
What other employee benefits services does Lux offer?
What is Ind AS 19?

Ind AS 19 is the Indian Accounting Standard governing employee benefits. Under Ind AS 19, long-term employee benefits require an actuarial valuation.

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What is an Ind AS 19 actuarial valuation?

An Ind AS 19 actuarial valuation is an assessment of a company’s current and future liabilities generated by employee benefits promises. To complete this report an agreed set of financial and demographic assumptions are used. These are based on the actuary’s best estimates, preferably supported by historical data.

An actuarial valuation requires skilled personnel, both in qualification and in specific experience and application, to meet the stringent reporting requirements. Actuaries are best placed to perform this task.

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Why does this information need to be disclosed?

It is important for companies to understand with certainty their Gratuity, Pension, Helath Care and Annual Leave Entitlement liabilities and to determine whether they are under or over accruing for these employee benefit obligations. It is also important to understand the impact these liabilities will have on a company’s cashflow.

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Does Ind AS 19 apply to all countries and companies?

Any company or entity that chooses to meet IFRS disclosure requirements will have to comply with IAS 19 as one of the underlying requirements. Meeting IFRS might be mandated by government, or company Head Office, or by desire to commit to global financial reporting standards and to access world markets, or as a matter of best practice. Ind AS 19 is the Indian version of this international standard.

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How does the process work?

As employee benefit specialists our proven approach means we:

Collect, reconcile and validate employee payroll data,
Engage with your team to set the valuation basis,
Calculate the actuarial cost of liabilities,
Conclude and make recommendations to Senior Management
Present an extensive actuarial report within five to ten working days

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What does the report include?

Our actuarial report sets out the following:

  1. Data: this includes full employee and benefit reconciliation
  2. Assumptions: we set out the impact and materiality or significance of each of our assumptions (demographic and financial)
  3. Methodology: we detail our approach in reaching these assumptions in accordance with Ind AS 19
  4. Results: we set out the figures you should use in the year-end financials in an easy-to-understand format
  5. Projections: we roll forward the results and provide a projection of estimated benefits versus expected future cashflows over the remaining lifespan of the benefits scheme for use in your budgeting process.
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How can Lux make your work as HR or Finance Director easier?

We will undertake the actuarial valuation on behalf of your company and ensure that the report is delivered in a timely, easy-to-use format.  By commissioning an actuarial valuation it helps a company to understand, with certainty, its employee benefit obligations. Such an exercise also serves to identify intrinsic risks and associated mitigating actions, which, if necessary, can be implemented without undue delay.

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How do I apply?

Contact Lux to obtain a detailed proposal, tailored to your Company’s specific needs, by submitting your details via the form on this page or contact us at:

Lux Actuaries & Analytics LLP
Yogesh, FIA, FIAI, ACA
Managing Partner Lux India
+91 9748 97 5590
yogesh@luxactuaries.com

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What are the advantages of conducting an actuarial valuation?

A company’s adoption of IFRS, including Ind AS 19 and/or IAS 19, ensures its financial statements are uniform and comparable to its peers. For long-term employee benefit liabilities, a projection of future cashflow is required up to employees’ normal retirement age. The projection should be conducted under multiple economic scenarios, in order to understand associated risks. This modelling of the future is what the actuarial profession specialises in. By commissioning an actuarial valuation it helps a company to understand, with certainty, its employee benefit obligations. Such an exercise also serves to identify intrinsic risks and associated mitigating actions which, if necessary, can be implemented without undue delay.

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What other employee benefits services does Lux offer?

We offer more than actuarial valuation solutions. As employee benefit specialists we are well equipped to provide our clients with a number of value-added services such as:

  • Validation of internal accounting calculations

  • Advice on schemes designed to match employee benefits liabilities

  • Guidance on how to mitigate the risks associated with employee benefit liabilities

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Contact Lux to obtain a detailed proposal, tailored to your Company’s specific needs.

Thank you for providing us with your details.

Yogesh Agarwal, Managing Partner Lux India, will be in touch shortly.

Should you have any questions in the meantime please contact us on
yogesh@luxactuaries.com

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Lux is...

  • A young and vibrant actuarial consultancy, eager to showcase our abilities to new clients
  • Highly experienced, we have delivered actuarial valuation reports to many prominent companies in India, the Middle East and wider
  • Fully abreast of all key regulatory and Ind AS 19 requirements
  • Committed to international codes of conduct that govern our profession
  • Focused on building long-term and valued relationships with our clients, helping them to manage their employee costs and retention
  • Committed to exceeding deadline expectations