Aggregate Level Cost Method

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DEFINITION

An acturial cost method that tries to match and allocate the cost and benefit of a pension plan over the span of the plan's life. The Aggregate Level Cost Method typically takes the present value of benefits minus asset value and spreads the excess amount over the future payroll of the participants.

INVESTOPEDIA EXPLAINS

Aggregate cost methods take into account the whole group and the cost of the plan is usually calculated as a percentage of yearly payroll. In addition, the percent is adjusted yearly if there are any actuarial gains or losses.




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