Since its recognition as a global pandemic in March 2020, the corona virus, or COVID-19, has had an unprecedented impact on not just businesses and industries across geographies but also on individuals and their approach towards various aspects of their professional and personal lives. Even as the world adjusts to the “new normal”, it is hard to deny that the pandemic will have both short- and long-term impact on the business performance of companies as well as behaviour of individuals.
As employee benefit actuaries, we are focusing on the potential impact of COVID-19 on long-term employee benefit costs. Some early manifestations of this crisis are workforce reductions, pay-cuts, zero or reduced salary increments and hiring freezes. The accounting implications of these changes will require a careful consideration as well as a relook at the assumptions currently being used for employee benefits actuarial valuations. The underlying principle being that the assumptions should represent our “best estimate” view over the long-term – something which is likely to be challenging to determine in the current times.
Please download the detailed note below around the effect of COVID-19 on actuarial assumptions and the potential impact on long-term employee benefits cost.
Effect of COVID-19 on actuarial assumptions
Download the detailed note
As always, we are committed to providing clarity and confidence to you, our valued clients, for meeting this ever-evolving challenge. For more information or guidance, please contact your Willis Towers Watson consultant or write to marketing.india@willistowerswatson.com.
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