Charan Gupta Consultants Pvt. Ltd offers a wide range of actuarial services to its clients. The company helps the client company to calculate gratuity of its employees.
The steps that are involved in the calculation of employee final salary are illustrated with the help of the following example:-
All the benefit amounts calculated above (proportion of projected benefit and unit benefit) are applicable as at the date of Employees retirement from service. In order to determine their values (i.e. Actuarial Liability and Normal Cost, respectively) the benefit amounts need to be discounted for interest (time-value of money) and mortality.
In this example we assumed that there are no other pre-retirement terminations or decrements. However, in an actual actuarial valuation exercise, we have used other decrements such as terminations, early retirements, disability, etc.