Actuarial Outpost 2008 Lump Sum distribution calcs
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#21
01-31-2008, 08:36 PM
 gunhog Member Join Date: May 2006 Posts: 34
unable to match

Can I get a little help?

I'm trying to match the age 60 factor of 161.14. I keep getting 162.28. Basically I value each year as follows (ex is second year):
P60 x (1/1.0485)^1 x PV(anty: i = 1.0485^(1/12)-1, n=12, pymnt=1/12, imdt anty)

= .9951 x .9537 x .9748 = .9251

I do this for every year up to age 120, using the appropriate segment rates. Anyone see something wrong? Or do you have to apply survivability to each monthly payment, using UDD?

Thanks a lot.
#22
02-01-2008, 01:59 PM
 Steve Grondin Member SOA AAA Join Date: Nov 2001 Posts: 6,550

Quote:
 Originally Posted by gunhog do you have to apply survivability to each monthly payment
That's how I get 161.14, and from what I gather, it's typical.
#23
02-10-2008, 06:16 PM
 Rick_G Member Join Date: May 2005 Location: Just south of the Big Chicken Posts: 2,209

Quote:
 Originally Posted by gunhog I'm trying to match the age 60 factor of 161.14. I keep getting 162.28. Basically I value each year as follows (ex is second year): P60 x (1/1.0485)^1 x PV(anty: i = 1.0485^(1/12)-1, n=12, pymnt=1/12, imdt anty) = .9951 x .9537 x .9748 = .9251 I do this for every year up to age 120, using the appropriate segment rates. Anyone see something wrong? Or do you have to apply survivability to each monthly payment, using UDD?
I'm not sure how you are getting the value of 162.28. Now that I got my spreadsheet fixed, I can give you some more details on the results shown at the beginning of this thread:
Quote:
 Originally Posted by Absolutsju Using Oct 2007 rates (4.77% Treas, 4.85% Spot1, 5.02% Spot2 and 5.09%SPot3) - I calculated the following values to convert an immediate monthly annuity to a lump sum: 50 = 190.1389 55 = 176.8137 60 = 161.1369 65 = 143.5088
Code:
```Annual		Monthly		Monthly		Monthly
annuity		annuity		annuity		exact
Due		"crude"		exact		Times 12.0

16.2983		15.83999	15.8449		190.1389
15.1881		14.72975	14.7345		176.8135
13.8821		13.42372	13.4281		161.1373
12.4135		11.95521	11.9591		143.5096```
The "crude" value is simply the annual annuity due less 11/24. The exact monthly annuity reflects the effect of the three segment interest rates, as described in this post.
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