Interest and Inflation Calculation

An inflation calculation is required to convert an older value into current terms, allowing for the impact of inflation. For example, previous general damages awards may be updated to their current value by adjusting for CPI inflation to date. An interest calculation is required to convert an older value into current terms, allowing for the impact of interest. It is similar to an inflation calculation but adjusts the amount by a rate of interest or investment return rather than inflation. Examples of this may be when a debt needs to be recalculated based on an annual rate of interest, or when a pension fund value needs to be reconstructed. An actuary will determine the exact interest, inflationary adjustment or investment return applicable, depending on the requirements of the case.

General Commercial

Actuaries may be called upon to calculate past and/or future economic loss because of:

1. A breach of contract where the failure of one party to act or properly perform in terms of the contract has caused the other party to suffer a financial loss
2. Theft of intellectual property
3. Certain statutory claims for example:
   1. The Competition Act entitles the Competition Tribunal to hand down a consent order that may contain an award for damages because of loss suffered as a result of a breach of the Competition Act.
   2. The Consumer Protection Act states that a producer, importer, distributor or retailer of 'goods' is liable for any harm caused by unsafe or defective goods, which do not comply with the Consumer Protection Act.

Contract and Labour Law

Where there is a breach of contract – commercial or employment based – a future economic/monetary loss may be incurred by a business or individual who is a party to the contract that needs to be quantified for the purposes of a damages claim against the breaching party. An actuary is then called upon to determine a lump sum payment that will compensate for the future economic loss suffered.

Mora Interest

Mora interest is charged when a debt is not paid timeously, and an interest rate has not been agreed upon between the parties involved. The interest rate charged is the prescribed rate determined by the Minister of Justice. The actuary calculates the amount of mora interest owing as a result on an unpaid debt as at the date of calculation.

Calculation of Interest on Arrears Pension Contributions

As per Section 13A of the Pension Fund Act, interest on arrear employer contributions to a pension fund is prescribed. Actuaries may be called upon to calculate the fund build-up on unpaid contributions and interest thereon.