1. Actuarial assumptions for the 2015 PSEO assessment
Item 6.1 of the agenda
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2. Update of assumptions (1/2)
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3. Update of assumptions (2/2)
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4. The Real Discount Rate (RDR)
It is computed as 18-years moving average of 1997 – 2014 RDR,
compliant with art & 11a of Annex XII of the SR
Nominal rate (Euro area zero-coupon (government bonds) yield with a maturity of 21 years): 4.8%
Deflator index (HICP): 2.1%
Real discount rate: 2.7%
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5. RDR and 18 years average evolution
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6. WG on Article 83 of the SR. Doc. 20150629Art83_05
NDR, IR and RDR evolution
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7. General Salary Growth (GSG) (1/2)
GSG is computed as the 18-years moving average of – 2014 Specific Indicators (SI), as per art and 11a in Annex XII of the SR.
However no salaries adjustment in 2011, 2013 and Salaries adjusted by +0.8% from 1st July 2012.
The Specific Indicators (SI) capture the changes in the purchasing powers of salaries of national civil servants in central government.
The 2011, 2012, 2013 and 2014 SI, calculated by Eurostat, respectively -1.8%, -1.1%, -1.4% and -1.3% were not applied.
Implicit SI of -3.5%, -1.9%, -1.5%, and -0.9%, respectively for 2011, 2012, 2013 and 2014 have been used for the GSG computation.
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8. General Salary Growth (GSG) (2/2)
GSG as 18-years moving average of the 1997–2014 Specific Indicators (SI)
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9. Specif Indicators and 18 years average evolution
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10. WG on Article 83 of the SR. Doc. 20150629Art83_05
The Individual Salary Progression (ISP)
ISP refers to the salary increase due to seniority steps advancement and promotions
Officials, Temporary Agents and Contract Agents advance to the next seniority step after two years, unless unsatisfactory performance or incompetence procedure (art. 44 & 51 of the SR).
Promotions are decided by the appointing authority in accordance with Article 45 of the SR.
ISP is calculated by function group, grade and number of years remaining till the assumed retirement age.
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11. Average ISP rates by function groups
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12. WG on Article 83 of the SR. Doc. 20150629Art83_05
Turnover definition
Active staff may terminate activity one day for a number of reasons, and thus leave the PSEO scheme
Turnover T1 refers to end of contract validity
Turnover T2 is due to voluntary and unexpected departures
Turnover is influenced by the contract type
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13. Turnover by contract type
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14. WG on Article 83 of the SR. Doc. 20150629Art83_05
2014 Invalidity table
Invalidity rate take into account the observed invalids over a 5-years period
Invalids by year
Extract from the Invalidity table
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15. WG on Article 83 of the SR. Doc. 20150629Art83_05
Life Table (1/2)
A first version of the ICSLT had been developed by Eurostat and ISRP and used by Eurostat in the 2008 to 2012 pension assessments
A provisional version of the ICSLT2013 used in the 2013 pension assessment, and Eurostat had committed to replace it once the final version been available (decision taken in the June 2013 meeting of the Art83WG).
Final version of the ICSLT2013 has been used for the 2014 and 2015 pension assessments.
The Life Table is updated on the occasion of the five years assessment.
The ICSLT2013 includes a future life expectancy trend over 30 years
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16. Life Table (2/2) Extract of the ICSLT2013 (1st year rates) 29.06.2015
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17. WG on Article 83 of the SR. Doc. 20150629Art83_05
Other assumptions (1/2)
Compared to the 2014 assessment, the other assumptions used for calculations have remained unchanged.
At meeting held on 27 June 2014, the Art. 83 WG members agreed on a 5-yearly updating of those assumptions.
No new legal provisions nor inexpected new observations would justify the use of different values for those parameters.
Those assumptions are:
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18. WG on Article 83 of the SR. Doc. 20150629Art83_05
Other assumptions (2/2)
The assumed retirement age (63 to 65),
Bonus for late retirement,
Pension reduction for early retirement,
The loading factor for orphan’s and divorced spouse’s pension (13%Further assumptions remain the same compared to the 2014 assessment:
The difference of age between a member and his partner at retirement (2y)
The probability of being married at retirement (81% for men and 49% for women)
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19. The Working Group is asked to express its views on this document
Thank you for your attention
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