The Projected Unit Credit (PUC) method is the actuarial method required by IAS 19 / HKAS 19 Employee Benefits to measure defined benefit obligations. It treats each period of service as earning an additional unit of benefit. Each unit is measured separately, using projected final salaries, and the units are discounted to build up the total obligation.
When the PUC Method Is Required
- Defined benefit pension and retirement schemes
- Hong Kong long service payment (LSP) and severance obligations, including the effect of the MPF offsetting changes
- Post-employment medical benefits and other long-term employee benefits
- Annual year-end financial reporting and interim updates for listed and private companies
How the PUC Method Works
- Collect employee data: age, service, salary, and benefit formulas from the plan rules or employment law.
- Set actuarial assumptions: a discount rate based on high-quality corporate or government bond yields, salary growth, turnover, mortality and retirement age.
- Project the benefits payable at each expected exit date, based on projected salaries.
- Attribute the benefit to service: allocate the projected benefit evenly over each employee's service period.
- Discount to obtain the defined benefit obligation (DBO), the current service cost and the interest cost.
- Reconcile and disclose: remeasurements (actuarial gains and losses) through other comprehensive income, sensitivity analysis and maturity profiles.
Why It Matters
Discount rate and salary assumptions can move the obligation significantly, and auditors scrutinise them closely. A clear, standard-compliant actuarial report reduces audit queries and supports accurate disclosure.
Trusted by Public and Private Companies and Multinational Corporations
Valtech Valuation is an independent valuation and transaction advisory firm with offices in Hong Kong and Singapore. Public companies, private businesses and multinational corporations rely on our valuations for financial reporting, transactions, fundraising and disputes. Our clients range from Fortune 500 companies, listed groups and US-listed firms to private equity funds, family offices and high-growth startups, across Hong Kong, Mainland China, Singapore, Southeast Asia, the Middle East and the United States.
Why Appoint Valtech Valuation for Reliable International Valuation Services
- Independent and defensible conclusions: objective, well-documented reports prepared to withstand audit, regulatory and investor scrutiny.
- ISO 9001 certified quality management: a certified quality process for consistent, reliable results.
- Proven with listed and multinational clients: experience supporting publicly listed groups, US-listed firms and Fortune 500 companies.
- International reach, local expertise: offices in Hong Kong and Singapore serving clients across Asia, the Middle East and the United States.
- IAS 19 reporting expertise: audit-ready reports with full disclosure support.
- Multi-disciplinary qualified team: accounting, finance, risk management, surveying and business valuation professionals on every engagement.
Professional Credentials of Valtech's Team
- PhD holders
- Certified Public Accountants – CPA (HKICPA)
- Chartered Financial Analysts – CFA
- Financial Risk Managers – FRM (GARP)
- Chartered Valuation Surveyors – MRICS (Royal Institution of Chartered Surveyors)
- Accredited in Business Valuation – ABV (AICPA)
- Certified Valuation Analysts – CVA (Singapore)
- Certified Public Valuers – CPV (China Appraisal Society)
Need an IAS 19 Actuarial Valuation?
Tell us about your scheme or obligations and your year-end, and we will prepare a tailored proposal.