how pension plan benefits are estimated
estimating the amount of money a company will need to pay its pension obligations is not a simple undertaking an actuary is a professional that uses mathematical and statistical analysis to measure risks and financial obligations for companies in the future actuaries create mathematical models to try to predict how long employees and their spouses will live future salary growth at what age employees will retire and the amount of money a company will earn from investing its pension savings the resulting estimate is the amount of money the company should have saved in the pension fund 3actuaries calculate the amount of contributions a company must pay into a pension based on the benefits the participants receive or are promised and the estimated growth of the plan s investments these contributions are tax deductible to the employer 4