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  #1  
Old 01-25-2016, 05:04 PM
MathGeek92 MathGeek92 is offline
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Default RP-2014 Age Basis

Does any one know how they classified the age basis in RP-2014? Age-last, exact age?

My question really is if I were using RP-2014 to value the expected future benefits of someone today that is age 62 and 3 months... would I assume the age 62 mortality rate for the next 9 months (assuming its an "exact" age table) and then go to 63, or is it an age last table, so I should use the age 62 rate for the next 12 months of my projection.

I've read through the SOAs description of how the table was constructed, but I couldn't find a reference to the method

tia
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Old 01-26-2016, 01:49 AM
zeus1233 zeus1233 is offline
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Quote:
Originally Posted by MathGeek92 View Post
Does any one know how they classified the age basis in RP-2014? Age-last, exact age?

My question really is if I were using RP-2014 to value the expected future benefits of someone today that is age 62 and 3 months... would I assume the age 62 mortality rate for the next 9 months (assuming its an "exact" age table) and then go to 63, or is it an age last table, so I should use the age 62 rate for the next 12 months of my projection.

I've read through the SOAs description of how the table was constructed, but I couldn't find a reference to the method

tia
Pension vals generally apply decrements once annually, and they aren't averaging them across ages (i.e. you don't use 9 months of the age 62 rate and 3 months of the age 63 rate for someone aged 62.25)

Generally, it is truncated age, not rounded age - one would treat a 62.9 year old as 62.
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Old 01-26-2016, 01:12 PM
MathGeek92 MathGeek92 is offline
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thats what i would have guessed, but was looking for verification in the SOA write up and couldn't find a description.

Thanks!
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  #4  
Old 01-26-2016, 02:55 PM
Duke of Chalfont Duke of Chalfont is offline
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Though the RP-2014 report itself surprisingly seems to be silent on this point, I am certain that the underlying age basis is "age nearest birthday" (rounded age). That was definitely the basis for RP-2000. So, someone aged 62 years 3 months would be treated as being age 62, while someone aged 62 years 10 months would be counted as being age 63.
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Old 01-26-2016, 04:17 PM
Helen Sass Helen Sass is offline
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Quote:
Originally Posted by MathGeek92 View Post
Does any one know how they classified the age basis in RP-2014? Age-last, exact age?

My question really is if I were using RP-2014 to value the expected future benefits of someone today that is age 62 and 3 months... would I assume the age 62 mortality rate for the next 9 months (assuming its an "exact" age table) and then go to 63, or is it an age last table, so I should use the age 62 rate for the next 12 months of my projection.

I've read through the SOAs description of how the table was constructed, but I couldn't find a reference to the method

tia
Neither of those. If you are doing a monthly rather than an annual calculation, you just interpolate between the ages. So 62 and 3 months is (age 62)*9/12 + (age 63)*3/12, etc.
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Old 02-09-2016, 04:47 PM
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Who says that linear interpolation is the way to go?
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Old 02-09-2016, 05:48 PM
Helen Sass Helen Sass is offline
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Who says that linear interpolation is the way to go?
People on the internets.

Please feel free to use any interpolation method you prefer. My point was that if you are going to the trouble of valuing an annuity on a monthly basis rather than annual, I would interpolate between the ages for the monthly annuity factors rather than use the same annual last age (or whatever) factor for each of the 12 months.
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Old 02-09-2016, 11:36 PM
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Colymbosathon ecplecticos Colymbosathon ecplecticos is offline
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Originally Posted by Helen Sass View Post
People on the internets.

Please feel free to use any interpolation method you prefer. My point was that if you are going to the trouble of valuing an annuity on a monthly basis rather than annual, I would interpolate between the ages for the monthly annuity factors rather than use the same annual last age (or whatever) factor for each of the 12 months.
The question is what do the ages in the table mean. For example, if (65) is the average of (64.5)+ to (65.5)-, then the average age for (65) is 65 (ignoring mortality between the endpoints) and your method makes sense.

On the other hand, if (65) us (65.0)+ to (66.0)-, the average is 65.5, and your method needs to be modified.

I think that this is the OP's original question.
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Old 02-10-2016, 10:29 AM
Helen Sass Helen Sass is offline
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Quote:
Originally Posted by Colymbosathon ecplecticos View Post
The question is what do the ages in the table mean. For example, if (65) is the average of (64.5)+ to (65.5)-, then the average age for (65) is 65 (ignoring mortality between the endpoints) and your method makes sense.

On the other hand, if (65) us (65.0)+ to (66.0)-, the average is 65.5, and your method needs to be modified.

I think that this is the OP's original question.
Quote:
Originally Posted by MathGeek92
My question really is if I were using RP-2014 to value the expected future benefits of someone today that is age 62 and 3 months... would I assume the age 62 mortality rate for the next 9 months (assuming its an "exact" age table) and then go to 63, or is it an age last table, so I should use the age 62 rate for the next 12 months of my projection.
My apologies if I misunderstood the OP (and the Duke's response). When they referred to "using age x" I thought they were talking about what to use to value the benefit, not what was used to construct the table.

I agree with the Duke that the underlying basis for this table (and I believe for most "official" mortality tables) is assumed to be age nearest which I believe is consistent with your first paragraph.

I would still answer the bolded question above much the same way. To value the benefit for someone age 62 and 3 months, if I was calculating on a monthly basis I would interpolate between the years for each month as I described, rather than use the age 62 rate for either 9 or twelve months and then switch to the age 63 rate.
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Old 02-12-2016, 01:25 PM
MathGeek92 MathGeek92 is offline
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I guess I was asking:

In order to properly understand how to use the table I need to know how it was constructed. If the table is birthday driven in it's exposure and experience, then it's exact age, I should use exact age assumptions when valuing a given benefit stream. If the table is based upon a policy age at issue, then I would need to know if it was an age near or age last table.

I think how the table is constructed is paramount in being able to use the resulting q's correctly.

I would think given the RP table is a pesion plan table, the q's would have been an exact age exposure basis. Most insurance products are a "policy age" basis (near or last)

Sorry if I made my question more confusing.
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