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Teilwertverfahren

English translation: (German) entry age normal method

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GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
German term or phrase:Teilwertverfahren
English translation:(German) entry age normal method
Entered by: RobinB
Options:
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18:40 Mar 9, 2004
German to English translations [PRO]
Bus/Financial - Accounting / Pension accounting
German term or phrase: Teilwertverfahren
I can't believe this hasn't been asked before! I know EURODICAUTOM has "entry age normal method" but I find this very unsatisfactory. I also realize this is strictly a German tax accounting method and is not used in US-GAAP or IFRS.
Ted Wozniak
United States
Local time: 13:05
entry age normal method
Explanation:
would appear to be correct, Ted, based on the following result of a bit of forensic terminology. Delving back into what must now be considered pre-history, I found the following in IAS 19 (revised 1993), but included in the IAS 1997 bound volume (i.e. the first German translation of IASs). It appears in the Annex to the Standard, which discusses "principal actual valuation methods", in a section entitled "Projected Benefit Valuation Methods/Gleichverteilungsverfahren".

Let's start with the English:

The Entry Age Normal Method

Under this method, each employee is assumed to have entered the plan when first employed or as soon as he or she became eligible. When a new plan is introduced the assumed date of entry is that on which the employee would have become eligible to join if the plan had been in existence at the time.

The current service cost is a level annual amount or a fixed percentage of salary which, when invested at the rate of interest assumed in the actuarial valuation, is sufficient to provide the required retirement benefit at the employee's retirement. Under this method, past service cost is the present value of the excess of projected retirement benefits over the amount expected to be provided by future contributions based on the current service cost.
...

And the corresponding German:

Das Teilwertverfahren

Bei dieser Bewertungsmethode wird angenommen, daß jeder Arbeitnehmer bei Beginn des Anstellungsverhältnisses oder sobald er oder sie eine Versorgungszusage erhalten hat, in den Versorgungsplan eingetreten ist. Wenn ein neuer Versorgungsplan eingeführt wird, gilt der Tag als zugrundelegendes Eintrittsdatum, an dem der Arbeitnehmer berechtigt gewesen wäre, dem Versorgungsplan beizutreten, hätte der Versorgungsplan zu dem Zeitpunkt bereits bestanden.

Der Dienstzeitaufwand ist ein gleichbleibender Periodenbetrag oder ein fester Prozentsatz vom Gehalt, der für die Gewährung der zugesagten Versorgungsleistungen zum Zeitpunkt der Pensionierung des Arbeitnehmers ausreicht, wenn er zu dem bei der versicherungsmathematischen Bewertung zugrundegelegten Zinssatz investiert würde. Bei dieser Bewertungsmethode entspricht der nachzuverrechnende Dienstzeitaufwand dem Barwert des Differenzbetrages zwischen den gesamten erwarteten Versorgungsleistungen und dem Teil dieser Versorgungsleistungen, der voraussichtlich durch künftige Beiträge in Höhe des Dienstzeitaufwandes bereitgestellt werden kann.
...

So there we have it. This first German version was translated in its entirety by subject area specialists, and pensions experts basically wrote the German version of IAS 19. So I think we can say with a fair degree of certainty that this is authoritative.

But what are we going to say for the Teilwert itself? I'm pretty sure it's an NPV, but not just any old NPV, so my suggestion is "NPV computed using the entry age normal method". How about that?

I'll cross-post this to FT.
Selected response from:

RobinB
Germany
Local time: 20:05
Grading comment
have to add "German" to this definition. But thanks Robin for the foensic terminology.
4 KudoZ points were awarded for this answer

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Summary of answers provided
5 +1entry age normal methodRobinB
5 +1partial-value methodIngrid Blank
4actuarial net-present-value methodxxxKirstyMacC
3not for pointssilvia glatzhofer


Discussion entries: 2





  

Answers


10 mins   confidence: Answerer confidence 5/5 peer agreement (net): +1
partial-value method


Explanation:
oder discount-value method according to HGB

--------------------------------------------------
Note added at 2004-03-09 20:21:03 (GMT)
--------------------------------------------------

Robin, I found this:... benefit obligation. HGB permits a number of different actuarial methods;
the partial value (\"Teilwert\") method pursuant to Art. 6a of ...
www.thyssenkrupp.com/fr/02-03/en/methods.html - 28k

and:
... have been accounted for at their partial value under § 6a of the EstG, by using
the 1998 guideline tables drawn up by Dr. Klaus Heubeck and by ...
www.hochbahn.com/.../Unternehmen/UeberUns/Kennzahlen/ Folder.2003-07-08.0726/HOCHBAHN_AR2002_E_Finance.pdf -


Ingrid Blank
PRO pts in category: 58

Peer comments on this answer (and responses from the answerer)
neutral  RobinB: Ingrid, do you actually have any cast-iron sources for these? Ingrid: no criticism intended, but I think that relying on such *translations* is very risky indeed. I think we'll all have to research this in greater detail.
50 mins
  -> Tackar!

agree  Henry Schroeder: "partial-value" is used time and again in the TM from one of Germany's major accounting firms. I'm sure proof can be found at google.
991 days
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12 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5
not for points


Explanation:
Sorry, I don't know the correct term for Teilwertverfahren (esp. with so little context), but I do know Teilwertabschreibung, which is write-down to the going (or going concern) value

Teilwert is the value of an asset as part of an enterprise (continuing as a going concern); OR going (concern) value

and Teilabschreibung is simply writedown

perhaps this helps

silvia glatzhofer
Local time: 20:05
Works in field
Native speaker of: Native in GermanGerman
PRO pts in category: 4

Peer comments on this answer (and responses from the answerer)
neutral  RobinB: Teilwert is certainly "going concern value" for asset valuations for tax purposes under section 6(1) 1 of the EStG, but what Ted's looking for is the separate reference to section 6a of the EStG, which unfortunately means something completely different.
44 mins
  -> You are right; have just read asker's additional explanation.
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3 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
actuarial net-present-value method


Explanation:
No time to explain - too much work. The burden of proof 'shifts' to Robin to disprove it, ha, ha!

Pensions appraisal: '... time. Using this method will always result in a lower value than would be determined using the present value method. Therefore, this ...'

'... See generally ACCOUNTING. – Actuarial assumptions: See ACTUARIAL ASSUMPTIONS. ... property:
– – Account balance agreement, net present value method required'











    Reference: http://www.pensionappraisers.com/pensionstory/pvaluing.shtml
xxxKirstyMacC
Local time: 19:05
Native speaker of: Native in EnglishEnglish
PRO pts in category: 13

Peer comments on this answer (and responses from the answerer)
neutral  RobinB: Almost there, I think. but it would be even stronger if you were to make a link to the German. Ha, ha indeed. Oh and BTW, your link doesn't seem to work. It certainly doesn't lead to "actuarial net present value method", with or without hyphens.
21 mins
  -> The link seems to work at my end. It defines waht I think are the main contenders: 'actuarial cost method' and 'net present method'. No link to German - i.e. EMIRE - but an extrapolation from Ted's quote.
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4 hrs   confidence: Answerer confidence 5/5 peer agreement (net): +1
entry age normal method


Explanation:
would appear to be correct, Ted, based on the following result of a bit of forensic terminology. Delving back into what must now be considered pre-history, I found the following in IAS 19 (revised 1993), but included in the IAS 1997 bound volume (i.e. the first German translation of IASs). It appears in the Annex to the Standard, which discusses "principal actual valuation methods", in a section entitled "Projected Benefit Valuation Methods/Gleichverteilungsverfahren".

Let's start with the English:

The Entry Age Normal Method

Under this method, each employee is assumed to have entered the plan when first employed or as soon as he or she became eligible. When a new plan is introduced the assumed date of entry is that on which the employee would have become eligible to join if the plan had been in existence at the time.

The current service cost is a level annual amount or a fixed percentage of salary which, when invested at the rate of interest assumed in the actuarial valuation, is sufficient to provide the required retirement benefit at the employee's retirement. Under this method, past service cost is the present value of the excess of projected retirement benefits over the amount expected to be provided by future contributions based on the current service cost.
...

And the corresponding German:

Das Teilwertverfahren

Bei dieser Bewertungsmethode wird angenommen, daß jeder Arbeitnehmer bei Beginn des Anstellungsverhältnisses oder sobald er oder sie eine Versorgungszusage erhalten hat, in den Versorgungsplan eingetreten ist. Wenn ein neuer Versorgungsplan eingeführt wird, gilt der Tag als zugrundelegendes Eintrittsdatum, an dem der Arbeitnehmer berechtigt gewesen wäre, dem Versorgungsplan beizutreten, hätte der Versorgungsplan zu dem Zeitpunkt bereits bestanden.

Der Dienstzeitaufwand ist ein gleichbleibender Periodenbetrag oder ein fester Prozentsatz vom Gehalt, der für die Gewährung der zugesagten Versorgungsleistungen zum Zeitpunkt der Pensionierung des Arbeitnehmers ausreicht, wenn er zu dem bei der versicherungsmathematischen Bewertung zugrundegelegten Zinssatz investiert würde. Bei dieser Bewertungsmethode entspricht der nachzuverrechnende Dienstzeitaufwand dem Barwert des Differenzbetrages zwischen den gesamten erwarteten Versorgungsleistungen und dem Teil dieser Versorgungsleistungen, der voraussichtlich durch künftige Beiträge in Höhe des Dienstzeitaufwandes bereitgestellt werden kann.
...

So there we have it. This first German version was translated in its entirety by subject area specialists, and pensions experts basically wrote the German version of IAS 19. So I think we can say with a fair degree of certainty that this is authoritative.

But what are we going to say for the Teilwert itself? I'm pretty sure it's an NPV, but not just any old NPV, so my suggestion is "NPV computed using the entry age normal method". How about that?

I'll cross-post this to FT.

RobinB
Germany
Local time: 20:05
Specializes in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 909
Grading comment
have to add "German" to this definition. But thanks Robin for the foensic terminology.

Peer comments on this answer (and responses from the answerer)
agree  xxxKirstyMacC: Def. seems to tie up real good. It would now be odd if Ted didn't choose his own answer.
9 hrs
  -> Indeed. Perhaps a problem with "actuarial present value" is that all projected benefit valuation methods will involve it, i.e. individual level premium/aggregate/attained age normal methods as well entry age normal. But the points don't matter here...

neutral  Henry Schroeder: I do not personnally have the knowledge to say whether this is possible, but it is certainly not elegant English and my aforementioned outsourcer never uses it or anything resembling it. If anything, actually, the term is often left out.
991 days
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