1. Actuarial assumptions for the 2014 PSEO assessment
Item 6.1 of the agenda
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Yearly change in assumptions (1/2)
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Yearly change in assumptions (2/2)
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The 2013 Real Discount Rate (RDR)
It is computed as 16-years moving average of 1998 – 2013 RDR
Nominal rate (Euro area zero-coupon (government bonds) yield with a maturity of 21 years): 4.9%
Deflator index (HICP): 2.2%
Real discount rate: 2.7%
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Real Discount Rate evolution
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6. RDR and 16 years average evolution
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7. The General Salary Growth (GSG) computation (1/2)
It is computed as a 16-years moving average of – 2013 Specific Indicators (SI), but
The 2011, 2012 and 2013 SI as calculated by Eurostat, respectively -1.8%, -1.1% and -1.4% have not been applied
Salaries have been adjusted by +0.8% from 1st July 2012
Consequently, implicit SI of -3.5%, -1.9% and -1.5%, respectively for 2011, 2012 and 2013 have been used for the GSG computation
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The General Salary Growth (GSG) computation (2/2)
GSG as 16-years moving average of the 1998–2013 Specific Indicators (SI)
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9. Specif Indicators and 16 years average evolution
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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 each two years (Article 44 of the SR).
Promotions shall be decision of 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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Turnover definition
Active staff might terminate activity one day for one reason or another, 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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2014 Invalidity table
Invalidity rate has been updated to take account the observed invalids in years 2009 to 2013
Invalids by year
Extract from the Invalidity table
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Life table (1/2)
First version of the ICSLT was developped by Eurostat and ISRP and it has been used by Eurostat in the 2008 to 2012 pension assessments
The Life Table is updated on the occasion of the five years assessment.
Provisional version of the ICSLT2013 used in the 2013 pension assessment, Eurostat 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 used for the 2014 pension assessment.
The new ICSLT 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) 27.06.2014
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17. Other assumptions used for calculations
Compared to the 2013 assessment, some assumptions have been updated to reflect new legal provisions in force from 1s January 2014 and past observations. Those assumptions are:
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%) (previously 10%)
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18. Other assumptions used for calculations (2/2)
Other assumptions remain the same compared to the 2013 assessment:
the difference of age between a member and his partner (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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