Actuarial Reserve for Accumulated Leave Benefits (GCR) with Enhanced Mortality and Interest Rate Modeling

The 2023 Malaysian Budget increased the maximum compensable unused leave for public employees from 160 to 180 days, significantly raising future liabilities for public sector employers. Under the Malaysian Private Entities Reporting Standard (MPERS), universities must recognise these benefits, which are payable upon retirement or death, as actuarial liabilities. Existing tools, such as the Jabatan Perkhidmatan Awam (JPA) calculator, offer limited accuracy as they do not account for mortality risk or interest rate fluctuations. This study introduces an enhanced actuarial reserve model that incorporates both uncertainties. The model considers two payment casesw which are upon retirement and upon death, using survival probabilities, interest discounting, and assurance factors to determine the expected present value of future cash awards. To evaluate model performance, a simulation study using a non-parametric bootstrap is conducted on 5,000 simulated employee records. Bootstrap resampling is repeated at increasing levels to measure bias and consistency. Results show that both bias and variance decrease as bootstrap iterations increase, indicating model stability and accuracy. This improved model offers a more realistic and reliable method for estimating future cash awards, ensuring better financial planning, policy compliance, and reserve adequacy for higher education institutions.