
#1




2018 EA2L #34
I'm going wrong somewhere on this question.
The 1/1/2017 AFTAP is ($780,000  $100,000) / $1,000,000 = 68%. For 2018, the presumed AFTAP from 1/1/2018 to 3/31/2018 is the 2017 AFTAP, or 68%. When the actuary fails to certify on 4/1/2018, this presumed AFTAP is reduced by 10%, to 58%. As a result of benefit restrictions taking effect 4/1/18, there is a mandatory PFB burn. The presumed FT is (1/1/18 AVA  1/1/18 PFB) / 58% = ($1,300,000  $350,000) / 58% = $1,637,931. We must burn enough PFB to avoid the benefit restrictions (i.e. get above 60%, or if possible, above 80%). There is not enough PFB to burn to bring the AFTAP up to 80%, so we must burn enough to get to 60%. Let the postburn PFB be X as follows: ($1,300,000  X) / $1,637,931 = 60%; solving for X, X = $317,241 (too high). When we try to burn enough PFB to get to 80%, we clearly don't have enough: ($1,300,000  X) / $1,637,931 = 80%; solving for X, X = ($10,345). Anyone know where my mistake(s) are in this problem? 
#2




The problem does not give you the 1/1/2018 Funding target. You must use the presumed AFTAP at 1/1/2018 and solve for the 1/1/2018 Presumed Funding Target (PFT).
Then you use that PFT to determine the amount of the deemed reduction at 1/1/2018, to get the PAFTAP equal to 80%. Then you do the deemed reduction again at 4/1/2018, due to the "10% haircut". 
#3




Quote:

Thread Tools  Search this Thread 
Display Modes  

