J.G. Gaston & Associates, Inc. Actuarial Consulting Services for Business, Government, and the Individual

Alternative Measurement Method


Entities with fewer than 100 plan members may use the Alternative Measurement Method.

How does the Alternative Measurement Method differ from a true actuarial valuation?

The Alternative Measurement Method was intended to allow smaller employers to avoid the cost of having triennial actuarial valuations prepared by a qualified actuary. In our opinion, the Alternative Measurement Method is very complicated and we doubt most small employers would want to prepare these determinations on their own. We can apply the Alternative Method to your OPEB plan, if requested. However, there would be higher actuarial fees and the plan cost determined under the Alternative Method would likely be much higher.

The following is from the GASB 43/45 Implementation Guide in regards to the Alternative Measurement Method:

"The method incorporates the same broad measurement steps as an actuarial valuation - projecting future cash outlays for benefits, discounting projected benefits to present value, and allocating the present value of benefits to periods using an actuarial cost method. In addition, the alternative measurement method requires employers to consider all elements of the substantive plan that would be considered in an actuarial valuation and to make assumptions related to all relevant factors based generally on actuarial standards of practice, unless a permissible simplification of an assumption is specifically identified in paragraphs 34 and 35 of Statement 45."

Is the Alternative Measurement Method ever required to be applied?

No. A regular actuarial valuation may always be prepared in lieu of the Alternative Measurement Method.