Defined benefit sensitivity analysis requires a named plan, population, date, and evidence owner. Sensitivity analysis shows how a supplied benefit measure changes when one named assumption changes while the stated model and other assumptions remain fixed. Preserve every condition around the result.
Apply it
A 50-basis-point decrease produces a $20.9 million PBO, versus a $20 million baseline; an increase produces $19.2 million. These points show direction and conditional magnitude.
Common mistake
Do not assume that a one-variable sensitivity predicts the most likely obligation. It is a conditional change under a stated assumption shift, not a probability-weighted forecast. That error would present a conditional scenario as though it were a forecast with assigned likelihood.
Keep the boundary clear
The result is not a probability range, confidence interval, linear interpolation rule, forecast, or rate-selection method. Do not apply it to another plan or measure without support.
Authority
Read ASC 715-20-50-1 for defined benefit disclosures and assumptions. The sensitivity shown here is a bounded analytical exercise, not a required forecast.
Put the concept to work
Apply this concept
- Explain and apply defined benefit sensitivity analysis within a reconciled employer benefit-plan workpaper using supplied authoritative and actuarial facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Pension discount rate — Apply
To apply this concept: Required. This prior concept supplies the terms, date, or measurement needed here.