Actuarial Assumptions Art83 WG Meeting Actuarial Assumptions Item 6 of the Agenda 27.06.2008 Art83WG / Doc.20080627 Art83_06
Content Summary of assumptions Changes in actuarial assumptions Real Discount Rate (RDR) General Salary Growth (GSG) Individual salary progression (ISP) Invalidity table Life table Other assumptions 27.06.2008 Art83WG / Doc.20080627 Art83_06
Summary of assumptions 27.06.2008 Art83WG / Doc.20080627 Art83_06
Changes in assumtions 27.06.2008 Art83WG / Doc.20080627 Art83_06
Real Discount Rate (RDR) 12-year moving average : 1996 - 2007 Nominal rate (5.3%): Euro area zero-coupon (government bonds) yield with a maturity of 21 years. The rate in 2007 as produced by the ECB being 4.5%) Deflator index (2.1%): - HICP rates Real discount rate (RDR) (3.1%): - This estimated RDR will be used in the final assessment 27.06.2008 Art83WG / Doc.20080627 Art83_06
RDR – Moving average 27.06.2008 Art83WG / Doc.20080627 Art83_06
RDR 2004 to 2012 27.06.2008 Art83WG / Doc.20080627 Art83_06
General Salary Growth (GSG) 2007 net SI = -0.4% 2008 GSG (12-year moving average 1996-2007) = 0.4% GSG decrease (-0.1%) compared to 2007 27.06.2008 Art83WG / Doc.20080627 Art83_06
General Salary Growth (GSG) GSG = yearly update of pay scale 27.06.2008 Art83WG / Doc.20080627 Art83_06
Specific Indicator (SI) GSG = yearly update of pay scale 27.06.2008 Art83WG / Doc.20080627 Art83_06
Individual Salary Progression (ISP) The ISP table has been updated to take account of: 2005 – 2007 Observed promotion rates (ISP groups 1 and 2) Update of fix ISP rate for group 5 (contractual agents): 0.2% instead 1% ISP refers to promotions and seniority steps 27.06.2008 Art83WG / Doc.20080627 Art83_06
ISP – Population by ISP groups ISP refers to promotions and seniority steps 27.06.2008 Art83WG / Doc.20080627 Art83_06
ISP – Population changes ISP refers to promotions and seniority steps 27.06.2008 Art83WG / Doc.20080627 Art83_06
ISP – Promotion rates 27.06.2008 Art83WG / Doc.20080627 Art83_06 ISP refers to promotions and seniority steps 27.06.2008 Art83WG / Doc.20080627 Art83_06
ISP – Average 27.06.2008 Art83WG / Doc.20080627 Art83_06 ISP refers to promotions and seniority steps 27.06.2008 Art83WG / Doc.20080627 Art83_06
Invalidity Table The invalidity table and the method to update if were presented to the WG in the June 2007 meeting Invalidity rate has been updated to take account the observed invalidity in years 2004 to 2007 An updated table (2008 EU Invalidity table) has been used in the calculation 27.06.2008 Art83WG / Doc.20080627 Art83_06
The 2007 EU-Invalidity table 27.06.2008 Art83WG / Doc.20080627 Art83_06
The Life table of health persons The analysis of mortality leads to following conclusions: The 2004 EU Life table overestimates mortality in ages 30 to 69 and underestimates it in ages older than 70 The 2004 EU Life table should not be used in future actuarial calculations A new table 2008 ICSLT is proposed 27.06.2008 Art83WG / Doc.20080627 Art83_06
The Life table of invalids persons It is assumed that life expectancy of invalids is slightly shorter than this of healthy persons A mortality rate corresponding to a healthy person 3 years older is currently used. The approach above must be implemented in the 2008 assessment 27.06.2008 Art83WG / Doc.20080627 Art83_06
Probability of being married The analysis of actives and ex-actives older than 59 years shows that the probability of being married is: 0.8 for men 0.4 for women This new probability must be used in the 2008 assessment 27.06.2008 Art83WG / Doc.20080627 Art83_06
The analysis of other assumptions like: The assumed retirement age (63 to 64) The average age difference between men and women (3 years) The loading factor for orphan’s and divorced spouse’s pension (10%) shows that they does not need to be updated 27.06.2008 Art83WG / Doc.20080627 Art83_06
Conclusions The Working Group is asked to express its views on the issues discussed in this paper Thank you for your attention 27.06.2008 Art83WG / Doc.20080627 Art83_06