Experience Studies 101. Presented by Daniel Wade, FSA, EA, MAAA June 23, 2010. Overview. What is an Actuarial Valuation? What is studied during an Experience Study? How are actuarial assumptions developed? When is an Experience Study performed? Analysis of individual assumptions.
Presented by Daniel Wade, FSA, EA, MAAAJune 23, 2010
What is an Actuarial Valuation?
What is studied during an Experience Study?
How are actuarial assumptions developed?
When is an Experience Study performed?
Analysis of individual assumptions
C = Contributions
I = Investment Income
B = Benefits
E = ExpensesFunding a Retirement Program
A = AVA , Actuarial Value of Assets
PVFNC = present value of Future
Normal Cost Contributions
PVB = Present Value of BenefitsPVB Exceeds Assets and Future Normal Costs
PVFNC = Future Normal Cost Contributions
UAAL = Unfunded Actuarial Accrued Liability
PVB = Future Benefits
A = Current AssetsUAAL Brings Equation into Balance
Decreases in assumption rates
Future Salary Increases made up of two components:
1. General Wage Increases
2. Individual Increases due to promotion and longevity
General Wage Increases made up of two components:
1. Consumer Price Index
2. Real Wage Inflation
Current Assumption is 4.00%, 3.50% for CPI and 0.50% for Real Wage Inflation.
Long-term historical data is considered.
Trustees Report for Social Security Administration considered.
We may recommend Real Wage Inflation increase this year, while CPI will likely decrease. Not clear what net impact will be.
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