Partial value method

The entry age method is an actuarial valuation method for obligations from company pension schemes .

The entry age method is regulated in Section 6a (3 ) EStG . The partial value defined there is a special case of the tax partial value according to § 6 EStG. The partial value method is used in German commercial and tax law , while the Projected Unit Credit Method (PUCM) is common in international accounting standards.

In the case of the partial value method, the expense for building up a pension provision is distributed evenly over the service life of the beneficiary employee via a fictitious premium (partial value premium). It is assumed that the pension commitment already existed when joining the company. Changes to the commitment thus also affect past premiums. This means that every change in the commitment results in a sudden change in the pension provision.