1. Actuarial Assumptions
Art83 WG Meeting
Actuarial Assumptions
Item 6 of the Agenda
Art83WG / Doc Art83_06

2. 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
Art83WG / Doc Art83_06

3. Summary of assumptions
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4. Changes in assumtions
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5. Real Discount Rate (RDR)
12-year moving average :
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
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6. RDR – Moving average
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7. RDR 2004 to 2012
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8. General Salary Growth (GSG)
2007 net SI = -0.4%
2008 GSG (12-year moving average ) = 0.4%
GSG decrease (-0.1%) compared to 2007
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9. General Salary Growth (GSG)
GSG = yearly update of pay scale
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10. Specific Indicator (SI)
GSG = yearly update of pay scale
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11. 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
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12. ISP – Population by ISP groups
ISP refers to promotions and seniority steps
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13. ISP – Population changes
ISP refers to promotions and seniority steps
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14. ISP – Promotion rates 27.06.2008 Art83WG / Doc.20080627 Art83_06
ISP refers to promotions and seniority steps
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15. ISP – Average 27.06.2008 Art83WG / Doc.20080627 Art83_06
ISP refers to promotions and seniority steps
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16. 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
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17. The 2007 EU-Invalidity table
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18. 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
Art83WG / Doc Art83_06

19. 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
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20. 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
Art83WG / Doc Art83_06

21. 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
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22. Conclusions
The Working Group is asked to express its views on the issues discussed in this paper
Thank you for your attention
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