BIR Ruling

May 13, 1970 Hon. Jose C. Zulueta House of Representatives Manila S i r : This is in connection with your request for the memorandum-justification by this Office of H. No. 1287, which amends R.A. No. 4917 (re private benefit plan), by incorporating therein the implementation already being actually affected thereto by this Office. cdti The amendment would in effect accomplish the following: (1) The amendment will extend statutory sanction to the B.I.R. rules and regulations, thus erasing impediments for their enforcement should their propriety be questioned in court; (2) The requirement that the costing of the retirement plan should be actuarially sound would bring about a reasonable plan as envisaged by the law. Soundness of actuarial assumptions can only be achieved if the determination is made by an independent consulting actuary. To be really independent, the actuary must be employed for no other purpose but to undertake such assumptions; (3) The actuarial projection of an independent actuary will indicate more or less a more stable costing that will withstand changes in personnel number and salaries for sometime unlike one prepared by an actuary who is laboring under some sort of influence which may require frequent adjustments to suit the employer's gross income standing. If the actuations of an actuary is influenced, he may provide a grossly inadequate costing when profits are low and effect higher costing when profits are high, thus bringing about higher deduction from gross income and necessarily, reduced income tax; and (4) Finally, a sound actuarial projection which can be made only by an independent consulting actuary will provide a greater security for the beneficiary employees. Considering the foregoing, this Office recommends the passage of the bill. Very truly yours, MISAEL P . VERA Commissioner of Internal Revenue