Gratuity actuary valuation

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bhavik mehta (Querist)
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20 February 2013 hello sir,

I need to give the data of salary for actuary valuation of employees of my company.
but i have one confusion that whether i need to give salary data of all the employees or only of the employees who have completed 5 years of services ??

please give your related suggestions and observations for the same..

thanking you in advance.

@VaibhavJ

@VaibhavJ (Expert)
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20 February 2013 Hi

You have to give data of all employees.

Thanks!!

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bhavik mehta

bhavik mehta (Querist)
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20 February 2013 thanks vaibhav,

can you further give explanation with compare to Act provisions and explanations of that.

as such gratuity liability is arises for the employees who have been in continuance in service for more than 5 years na???

so why it require to give all the employees data??

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@VaibhavJ

@VaibhavJ (Expert)
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20 February 2013 Hi

Its actuary valuation made for reporting date assuming instant liability if all employee completes 5 years of services.

So while valuing Int. Rate, Growth Rate & Avg life span of employee is considered.

You can refer AS15 for details.

Thanks!!

bhavik mehta

bhavik mehta (Querist)
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20 February 2013 okk ,...

Thanks vaibhavj

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SURESH

SURESH (Expert)
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04 November 2014 Though the gratuity liability payout arises after 5 years of service (except death),it starts accruing for the employer from day employee joins the company.

e.g Let us assume the 0 interest, 0 inflation 0 decrement (probability of death and exit is 0) world (hypothetical scenario). Then if the current yearly salary (basic + DA) is Rs 1200 then the accrued liability at the end of year 1 would be around 50 (around half month's salary for each year of service). You have to account this as a accrued liability in your books.

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