What is actuarial balance?

Actuarial balance refers to the financial health of a pension plan or social insurance program, assessing whether its projected income will be sufficient to cover future liabilities. It is determined by comparing the present value of future benefits to the present value of future contributions. A plan is considered actuarially balanced if the two sides are equal over a specified period, typically 75 years. This concept is crucial for ensuring the sustainability of programs like Social Security and pension funds.