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Old 01-20-2018, 09:57 PM
m929m485 m929m485 is offline
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Question What is a "fully generational" projection?

I am a non-actuary and don't aspire to become an actuary (no disrespect), but I came across the description below and I'm trying to understand it better--could someone explain? I understand the basics of how projections to a certain year work, but what does "fully generational" mean?

"Mortality determined using the sex-distinct UP-1994 Mortality Table with Projection scale AA to 2012 and then fully generational thereafter using scale AA."

Thanks in advance.
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Old 01-20-2018, 11:10 PM
Westley Westley is offline
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You might get better answers in the Life forum. I posted this: http://www.actuarialoutpost.com/actu...47#post9218647
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Old 01-21-2018, 01:00 AM
Yamamay Yamamay is offline
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This is a Pension related question actually.
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Old 01-21-2018, 01:57 PM
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It means, in effect, that the mortality improvement factors vary by both age grouping and year of birth grouping. (I don't know how fine the grouping is, whether it's every year/age, or groups of 5, 10, or even longer.)
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Old 01-21-2018, 03:55 PM
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Quote:
Originally Posted by m929m485 View Post
I am a non-actuary and don't aspire to become an actuary (no disrespect), but I came across the description below and I'm trying to understand it better--could someone explain? I understand the basics of how projections to a certain year work, but what does "fully generational" mean?

"Mortality determined using the sex-distinct UP-1994 Mortality Table with Projection scale AA to 2012 and then fully generational thereafter using scale AA."

Thanks in advance.
Where does the description occur?

Fully generational should mean that the mortality rate depends on both the attained age and the calendar year in which the mortality rate applies. The quoted construction seems a little strange, unless it is being applied to some mortality in years before 2012 (in which case I would interpret is as saying use 2012 mortality rates in years before 2012 but mortality rates projected to year x for years after 2012.)
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Old 01-22-2018, 09:33 AM
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Where does the description occur?

Fully generational should mean that the mortality rate depends on both the attained age and the calendar year in which the mortality rate applies. The quoted construction seems a little strange, unless it is being applied to some mortality in years before 2012 (in which case I would interpret is as saying use 2012 mortality rates in years before 2012 but mortality rates projected to year x for years after 2012.)
99.99% certain this is a pension valuation.

The Pension Protection Act introduced static projections of mortality tables for private pensions in 2008 (7 years past the val date for inactives and 15 for actives) and some public pensions started using them around the same time. The shift to fully generational mortality is still ongoing in the public pension space. I can't remember if the IRS has required a shift to fully generational or if they still require the static projection.
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Old 01-22-2018, 09:44 AM
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Quote:
Originally Posted by m929m485 View Post
I am a non-actuary and don't aspire to become an actuary (no disrespect), but I came across the description below and I'm trying to understand it better--could someone explain? I understand the basics of how projections to a certain year work, but what does "fully generational" mean?

"Mortality determined using the sex-distinct UP-1994 Mortality Table with Projection scale AA to 2012 and then fully generational thereafter using scale AA."

Thanks in advance.
In this case, Gandalf's description is accurate.
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Fully generational should mean that the mortality rate depends on both the attained age and the calendar year in which the mortality rate applies.
For a little more detail, UP-1994 is the base mortality table and is assumed to apply to deaths that occur in a base year (we'll call it 1994 since I can't remember the actual year). Scale AA provides a scale to improve mortality (i.e. fewer deaths) to the rates in the table as years progress. This description is basically saying that mortality improvements are applied from the base year to 2012 for 2012 and any years prior in the valuation. For 2013 and beyond, mortality is assumed to improve each year based on applying scale AA so age 65 mortality is lower in 2014, than in 2013, which is lower than in 2012 and future mortality is assumed to improve accordingly for the remainder of the years in the projection.
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