Frozen Initial Liability Method to Determine Normal Cost of Pension Fund With Vasicek Interest Rate Model

Abstract

Civil servants have an important role in national development, so increasing their productivity is needed. The pension fund program is given as a form of effort by government agencies to ensure employee welfare when entering retirement. This research discusses the normal cost of the defined benefit pension program using one of the actuarial valuation methods, namely Frozen Initial Liability (FIL), by taking into account the stochastic interest rate following the Vasicek model. The data used in this study are lecturers majoring in MIPA, Faculty of Science and Technology, Universitas Jambi, consisting of 8 people of female gender with the status of being a participant since 2022. Based on the calculation results obtained that in the period 0-30 years, the normal cost for each group member is constant, namely per year or per month. When the working period entered 31 years, one by one the participants began to enter their retirement period, which resulted in a change in the normal cost value. At 38 years of service, there was only one participant with a normal cost of per year or by per month. Changes in normal cost tend to decrease when retirement program participants also decrease. In the period of more than 38 years, all participants have retired so that normal cost payments are stopped.