![Page 1: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/1.jpg)
AOFF ConsultingAustin Hunt / Natalie Joseph / Jianzhen Wang / Jiahui Zhou
![Page 2: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/2.jpg)
Introduction
![Page 3: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/3.jpg)
Actuarial Funding Valuation
![Page 4: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/4.jpg)
Recommendation forActive Retirement Rates
Age Current New55 5% 5%56 5% 5%57 5% 5%58 5% 5%59 5% 10%60 10% 20%61 10% 25%62 20% 30%63 30% 30%
Age Current New64 40% 30%65 100% 30%66 100% 30%67 100% 30%68 100% 30%69 100% 30%70 100% 65%71 100% 100%
![Page 5: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/5.jpg)
Assumptions Review
![Page 6: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/6.jpg)
Active Retirement RatesAge Rates55 5%56 5%57 5%58 5%59 5%60 10%61 10%62 20%63 30%64 40%65 100%
![Page 7: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/7.jpg)
Active Retirement RatesMr. Switch, born in 2000
Age 60 in 2060
Retire in 2060 – 2061: 10%
Age Rates55 5%… …60 10%… …
![Page 8: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/8.jpg)
Active Retirement Rates
RATE =DECREMENTS
EXPOSURE
# (Retire at Age 60)# (Age 60)
YEAR 2012 YEAR 2013 YEAR 2014 YEAR 2015 YEAR 2016
DECREMENTS 12 14 6 7 8EXPOSURE 51 72 54 46 44
← EVENTS← TRIALS
![Page 9: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/9.jpg)
Active Retirement Rates
RATE =DECREMENTS
EXPOSURE
# (Retire at Age 60)# (Age 60)
YEAR 2012 YEAR 2013 YEAR 2014 YEAR 2015 YEAR 2016
DECREMENTS 12 14 6 7 8EXPOSURE 51 72 54 46 44
47267 # = 17.60%
← EVENTS← TRIALS
![Page 10: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/10.jpg)
Active Retirement Rates Based on 2012-17 Valuation Data
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72
Activ
e Re
tirem
ent R
ates
Age Actual Rates Based on Valuation Data
17.60%
![Page 11: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/11.jpg)
Active Retirement RatesSample
Proportion ESTIMATE PopulationProportion
0% 3% 5% 8% 10% 13% 15% 18% 20% 23% 25%
95%CONFIDENCE INTERVAL
N = 267P = 10%
Age Rates60 10%
![Page 12: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/12.jpg)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72
Activ
e Re
tirem
ent R
ates
Age Current Assumption Confidence Interval
Active Retirement Rates with 95% Confidence Interval Around Current Assumption
10%
Age 60 CI
![Page 13: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/13.jpg)
Active Retirement Rates with 95% Confidence Interval Around Current Assumption
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72
Activ
e Re
tirem
ent R
ates
Age Actual out of CIActual in CI Current Assumption
![Page 14: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/14.jpg)
New Assumptions
![Page 15: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/15.jpg)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72
Activ
e Re
tirem
ent R
ates
Age Actual
Active Retirement Rates
New Assumption Current Assumption
![Page 16: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/16.jpg)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72
Activ
e Re
tirem
ent R
ates
Age Actual
Active Retirement Rates
New Assumption Current Assumption
![Page 17: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/17.jpg)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77
Term
inat
edVe
sted
Retir
emen
t Rat
es
Age Actual Current AssumptionNew Assumption
Terminated Vested Retirement Rates
![Page 18: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/18.jpg)
0%
5%
10%
15%
20%
25%
30%
35%
40%
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55
Activ
e Te
rmin
atio
nRa
tes
Age Actual Current AssumptionNew Assumption
Active Termination Rates
![Page 19: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/19.jpg)
0%
5%
10%
15%
20%
25%
30%
35%
40%
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55
Activ
e Te
rmin
atio
nRa
tes
Age Actual Current AssumptionNew Assumption
Active Termination Rates
![Page 20: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/20.jpg)
0%
5%
10%
15%
20%
25%
30%
35%
40%
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55
Activ
e Te
rmin
atio
nRa
tes
Age Actual Current AssumptionNew Assumption
Active Termination Rates
![Page 21: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/21.jpg)
Liability
![Page 22: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/22.jpg)
RETIRED• Commenced
Benefit
ACTIVE• Increase future
liability
TERMINATED• Vested• Not vested
Types of Participants
![Page 23: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/23.jpg)
Active Retire
Terminated
ACTIVE RETIREMENT RATES
ACTIVE TERMINATIONRATES
TERMINATION VESTEDRETIREMENT RATES
Application of Rates
![Page 24: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/24.jpg)
RetirementBenefit
Mortality
Discounting
Liability
RetirementDate
Methodology
![Page 25: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/25.jpg)
$125 M
$132 M
$100
$105
$110
$115
$120
$125
$130
$135
Current New
Liab
ility
of A
ffect
ed G
roup
s(in
mill
ions
)$7M
Change in Liability
![Page 26: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/26.jpg)
Conclusion
![Page 27: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/27.jpg)
Thank You
![Page 28: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/28.jpg)
Appendix I
CONFIDENCE INTERVAL
( P − ZP 1−P
N�
, P + ZP 1−P
N�
)
![Page 29: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/29.jpg)
Appendix IIPlan Provisions
§ Annuity = $800 × Years of Service§ Retirement Age: normal 65, early 55§ Vesting: 100% after 5 years of service
Assumptions§ Pre-retirement rates§ Investment return: 7.5%§ Mortality: age 80
![Page 30: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/30.jpg)
Appendix IIIPresent Value of Pension Payments for One Participant:
where i: investment returnt: retirement yearx: age at tyx: average years of service for age x group
$800 &yx & an'|∙ v2017−t
![Page 31: Presentation Team 6 - University of California, Los Angelesactuary/caseCompetition/Case... · 2018. 1. 18. · Avgyrs ofservice Age Assumption rates Active in '18 Stillactive '18](https://reader036.vdocument.in/reader036/viewer/2022071011/5fc9dfcef7fea82a510bf262/html5/thumbnails/31.jpg)
Avg yrsof service Age Assumption
ratesActive in
'18Still active
'18Act-ret
'18 Liability
21.20 55 5% 44 42 2 $384,199
17.75 56 5% 41 39 2 $296,320
21.98 57 5% 33 32 2 $293,920
21.14 58 5% 38 36 2 $317,287
23.77 59 5% 48 46 2 $446,273
22.75 60 5% 47 44 2 $401,694
21.85 61 5% 34 32 2 $276,906
24.58 62 20% 24 19 5 $843,328
23.06 63 20% 21 17 4 $673,370
25.94 64 20% 14 12 3 $508,162
26.55 65 100% 4 0 4 $697,684
Appendix IV