Establishing Actuarial Assumption Sets

Unisex or Sex Distinct

Select Sex Distinct to use one table, and select the table name in the Table 1 / Male Tablefield.

Select Unisex to use a blend of male and female mortality tables. Then select the table names in the Table 1 / Male Table and Table 2 / Female Tablefields. In the % of Table 1 Rate field, enter a percentage that indicates the weight to assign to Table 1 in determining the final rate. For example, if you enter 75, the system computes the blended rate by adding 75 percent of the Table 1 rate and 25 percent of the Table 2 rate.

Some tables—for example, the GAR94 and the GATT_GAM83 tables, which are supplied with the system—already include blended rates.

Age Offset

Select this option to use the mortality rate for an age which is a specified number of years older or younger than the actual age of the participant or beneficiary. Enter the number of years to adjust by, and select either Back or Forward to indicate whether the adjustment is to a younger or older age.

Age Difference Duration

This options appears only in the Beneficiary Mortality Basis group box. Enter a duration that measures the difference between the employee and beneficiary ages. This enables the system to more efficiently access the appropriate mortality information.

Use Flat Rate of

Select this option to use a specified interest rate, and enter the assumed interest rate in the adjacent % field.

Use Custom Table Lookup

Select this option to use a Table Lookup to get the interest rate from a standard rate table. In the Table ID field, enter the name of a table lookup alias to reference the table.

Use PBGC Grading Structure (use Pension Benefit Guaranty Corporation grading structure)

Select this option to use the PBGC grading structure. This grading structure applies interest over a number of years, typically from the event date to the benefit deferral date if, for example, an employee terminates at age 40 but does not receive a benefit until age 65. The PBGC grading structure includes:

• An immediate interest rate after the deferral date.

• An interest rate for a defined period prior to the deferred age (for example, the first seven years before the deferral date).

• An interest rate for a defined period prior to that.

• An interest rate for all other years back to the event date.

If you use PBGC grading, also enter information in these fields:

• Table ID: Enter the name of a table lookup alias for a table that provides the "immediate rate." The system then derives the additional rates that make up the graded structure. Normally, you reference the PBGC rate table, although theoretically you can use any rate table.

• Deferred to Age: Enter the age at which the benefit is assumed to commence. You can enter either a constant age, such as age 65, or an alias, such as the benefit commencement date.

• Scaled by Percentage: To scale the PBGC rates by a factor, enter an annual scaling percentage. For example, enter 120 to increase the immediate rate and any applicable deferred rates by 20 percent.

  Enter 100 as the default rate.

See PBGC Rates Page.

Use Segment Rates

Select this option to use the Segment Rate table. Segment rates are based on the yields on high quality corporate bonds as determined by the Internal Revenue Service. Different rates apply to different time periods; up to three different interest rates can be used depending on the duration of the liability.

If you use segment rates, you can optionally enter information in these fields:

• Effective Date Alias: The segment rate table is effective dated. You can enter an effective date alias to determine which effective-dated set of rates to use. If you leave this field blank, the calculation process uses the calculation as-of date to determine which effective-dated set of segment rates to use.

• Valuation Date Alias: Each effective-dated set of segments rates consists of different sets of rates for different valuation dates. You can enter a valuation date alias to specify the date to use as the valuation date. If you leave this field blank, the calculation process uses the benefit commencement date as the valuation date.

See Maintaining Interest Rate Tables.

Discount with Interest Only

Select this option to disregard the mortality rates for employees under a certain age and instead use the interest assumptions. Specify the cutoff age in the Prior to Age field.

Include Cost of Living

Select this option if you want the assumption set to take into account an assumed cost of living adjustment (COLA).

In the Adjustment of field, enter the adjustment percentage.

In the Commencing with Age field, enter the age when you assume the adjustment is to occur.