Actuarial Science

In the pension industry, actuarial methods are used to measure the costs of alternative strategies with regard to the design, funding, accounting, administration, and maintenance or redesign of pension plans.

Actuarial science became a formal mathematical discipline in the increased demand for long-term insurance coverage such as burial, life insurance, and annuities. These long term coverages required that money be set aside to pay future benefits, such as annuity and death benefits many years into the future. This requires estimating future contingent events, such as the rates of mortality by age, as well as the development of mathematical techniques for discounting the value of funds set aside and invested.