INTRODUCTION OF MITHRAS CONSULTANTS About Mithras Consultants Mithras
INTRODUCTION OF MITHRAS CONSULTANTS About Mithras Consultants: Mithras Consultants is an independent actuarial and insurance consultancy firm providing qualitative financial and insurance solution to its clients. Mithras advantage stems from our ability to bring our experience into our client advisory services, our team has rich regulatory experience allowing us to build client solutions centred on regulatory compliance in order to build forward looking robust internal processes to allow our customers to operate smoothly and to be a stakeholder in their progress. Our goal is to provide business solution customized to client‘s need to help our clients make the best possible decisions on their financial, insurance and risk management programs. Our team has a combined experience of 5 decades that spans into areas of Pricing , Valuation, Investments, Risk Management, Employee Benefit Valuations etc in Insurance in actuarial field. 1
BUSINESS PARTNERS AT MITHRAS CONSULTANTS Mr. Dinesh Chandra Khansili Mr. Dinesh brings with him 33+years of insurance, pension and actuarial experience. He worked in almost all sections of Life Insurers in India and abroad. He worked in LIC of India, IRDAI, Aviva India and Asset Resource Management Company, Lagos. He was part of Leadership Team at Lagos based Company. Currently he is advising as Actuarial Consultant to Aviva India and ARM Gp. Lagos. By profession he is an Associate Actuary and at the specialist level has passed Life Insurance, General Insurance, Pensions and other Employees Benefits and Regulations subject. He has presented many papers at various forums. At Mithras all your Regulatory issues will be swiftly resolved under Dinesh experienced and watchful eyes. Ms. Sapna Malhotra Sapna is one of the youngest people in India to achieve Actuarial Fellowship. Her actuarial experience of around 9 years includes working experience in Product design and Pricing, statutory reserving and reporting, Solvency-II implementation and reporting, Modelling, Business Planning, Experience investigation, Asset Liability Management, Solvency Computation and its reporting, etc. She is also supporting Institute of Actuaries of India examination system. With exceptional management and technical abilities, Sapna will take care of all your technical issues at Mithras. 2
EMPLOYEE BENEFITS ACTUARIAL VALUATION UNDER AS 15 (REVISED, 2005), IAS 19(R) AND OTHER ACCOUNTING STANDARDS 3 MITHRAS CONSULTANTS
WHAT IS EMPLOYEE BENEFIT VALUATION To recognise a liability when an employee has provided service in exchange for employee benefits to be paid in the future To recognise an expense when the enterprise consumes the economic benefit arising from service provided by an employee in exchange of employee benefits 4
NEED FOR ACTUARIAL VALUATION Actuarial valuations in India are mostly done for accounting purposes - under AS 15 (revised, 2005) Mandatory actuarial certification required 5
GOVERNING ACTS AND REGULATIONS The Payment of Gratuity Act, 1972 The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (EPF & MPA) Accounting Standard (AS) 15 (revised 2005) 6
FAQS Clarification 1 - My Company’s employees are 15 in number but it is 4 year old company, so my company is not required to make provisions under payment of gratuity act as minimum service required is 5 years; Answer 1 - Since Company has more than 9 employees and so provision for gratuity is to be made from day 1 and minimum 5 year condition is for pay-out in case of exit (except death and disability where minimum service condition does not apply) and not for making provision till 5 years. The pay-out can arise even on day 1. Clarification 2 - Even if provisions of AS 15 (R) 2005 do not apply to my company, is actuarial valuation required? Answer 2 - Even the companies do not fall under categories mentioned in AS 15 ( R) 2005, however companies should consult an Actuary whether they need actuarial valuation or not. The need for actuarial valuation is determined by the actuary in consultation with the auditors after assessing materiality issues. In other words, requirement of actuarial valuation falls more or less on every registered company. 7
FAQS Clarification 3 - My Company has funded the liabilities with an insurance company and used to get AS 15 valuation certificates from respective insurance company as they agreed to provide the same. Company used to ensure that such certificates are signed by a qualified actuary and are prepared as per the provisions of AS 15 (R) 2005. IRDAI brought out circular in Dec 2013, where it mentions that Companies should get the valuation certificate from external actuaries. Going forward insurance companies would not issue actuarial certificate and if they issue it would be non-compliance of regulations. Both employer and insurance company be held responsible. Clarification 4 - Which are the employees’ benefits for which Actuarial valuation is NOT required? ü Defined Contribution pension schemes where no investment return guarantee is provided ü Leaves and other benefits which cannot be carried forward beyond one year 8
ELIGIBILITY Companies covered under AS 15 (revised, 2005) In its entirety which fall in one or more of following during accounting period; Enterprises whose equity or debt securities are listed whether in India or outside India. Enterprises which are in process of listing their equity or debt securities as evidenced by the board of directors’ resolution. Banks including cooperative banks/Financial Institutions Enterprises carrying on insurance business, All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statement exceed Rs 50 Crore. Here Turn over does not include ‘other income’. All commercial, industrial and business reporting enterprises having borrowings, including public deposits in excess of Rs 10 cr at any time during accounting period. Holding or subsidiary enterprises of any of the above at any time during accounting period, Any company which do not fall above but on an average has 50 employees during year, with some exceptions. 9
ACTUARIAL VALUATION We provide services for the following actuarial valuations of employee's benefits as per statutory requirement of Accounting Standard 15 (revised) issued by the Institute of Chartered Accountants of India. We provide actuarial valuation for the following: Gratuity Liability Leave Encashment Liability Sick Leave Benefits Post Retirement Medical Benefits Long Service Benefits (e. g. awards given on completion of certain number of years of service or at retirement) Health Related Benefits Disability Benefits Pension and Other Defined benefits plan Exempt Provident Fund (those PFs managed in-house and not by EPFO) Any other employee benefit which fall beyond 1 year, e. g. ESOPs. 10
OTHER ACTUARIAL SERVICES Estimate valuations for future accounting periods Assumption setting Experience Analysis- Analysis of employee turnover rates, option take-up rates, Investment performance measurement and analysis Funding and Statutory Valuations - Setting contribution rates so as to meet specified objectives, Assessment of adequacy of funds Preparation of run-off plans for closed/discontinued schemes Statutory funding valuations under US and UK legislations Asset Liability Management for estimation of: Optimal investment strategy/asset allocation , Costing and reporting of minimum benefit guarantees/underpins Under Defined Contribution schemes, setting up terms for early/late retirement , commutation and other employee options Scheme design and alteration Cost estimation for alternative Defined Benefit designs Setting contribution rates for Defined Contribution schemes Conversion from Defined Benefit to Defined Contribution 11
BACKBONE OF ACTUARIAL VALUATION Employee Data Assumptions Benefit Valuation Analysis Disclosures as per AS 15 Revised) 12
ASSUMPTIONS REQUIRED Discount Rate Mortality during service and post retirement, spouse and dependent mortality Salary Inflation and benefits level including claim processing cost Assumptions Rate of employees turnover, disability and early retirement, age difference Rate of return on plan assets 13
OUR EXPERTS WILL HELP YOU Estimate Employee Benefits expense and liability to be recognized in the financial statements Project Employee Benefit Obligations for future years Analyze the employee liability Year on Year We will provide Qualitative valuation with full Disclosures on pre decided Timeline at very Competitive price. 14
CONTACT US Manesar Office: Delhi Office: F-204, DLF New Town Heights AC – 180, Shalimar Bagh West Sector 86, Gurgaon 122004 Delhi – 110088 Contact Person: Sapna Malhotra – 09212375418 Ashish Gupta – 09818520021 (Partner – Mithras Consultants) (Senior Actuarial Consultant) sapna. malhotra@mithrasconsultants. com ashish. gupta@mithrasconsultants. com Website: www. mithrasconsultants. com Email us at : info@mithrasconsultants. com 15
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