Jump to content
Sign in to follow this  
No Name

94 GAR Sex distinct Annuity Purchase Rates

Recommended Posts

.... including the newest group the College of Pension Actuaries. ....

SoCal - where is this group? Do they have a website?

Share this post


Link to post
Share on other sites
Guest Doug Goelz

Wow, this post really got off track.

As flosfur mentioned, mortality rates typically carry six significant digits. Having said that, I think your purchase rates are pretty close.

A couple comments:

Do you use the rates in column T of your spreadsheet? If these are supposed to be joint and contingent purchase rates, I do not agree with your results.

Be careful with your mortality table terminology. Rev Rul 2001-62 used poor terminology. The rates contained in that revenue ruling were based on a 50/50 male/female blend of projected UP-94 rates (projected with Scale AA for 8 years from 1994 to 2002). The UP-94 table is the same as the 1994 GAM table except for a load added to the 1994 GAM mortality rates to make it acceptable for insurance reserving.

When generational mortality improvement is used with the 1994 GAM table, the standard naming convention is to call it the 1994 GAR (Group Annuity Reserving). When no generational improvement is used with it, the standard naming convention is to call it the 1994 GAM Static table (since no projection of mortality rates is involved).

Unfurtunately, when the IRS issued 2001-62, they did not follow the standard naming convention and called their unisex table the 1994 GAR. As a result of this, many people mistake what the real 1994 GAR rates are supposed to be.

Share this post


Link to post
Share on other sites
Guest Doug Goelz

Sorry, I looked at your sheet a few more minutes, and I see that column T values are joint-life rates -- and that your joint and contingent rates are in column U. For the 50% joint and contingent option, I agree with those rates for a 65/65 combination.

Share this post


Link to post
Share on other sites
.... I know of several firms in my city that offer db admin, but don't have an actuary.  They just farm it out.  They have no idea if the signing actuary knows what they are doing.  They don’t even know what they don’t know.  I think this does a real disservice to the clients.  I have seen really horrendous work that has to be cleaned up.  It's difficult to explain to the client why you need to redo the last 5 valuations because the actuary didn't know how to calculate the RPA current liability.

So when people take their car to (i.e. farm it out to) the mechanic, do they know exactly how and what the mechanic is doing?

We all hire experts all the time including experts hiring other experts. Auto shops (including dealers) farm out transmission, engine rebuilding and body work. Dcotors send their patients to other specialists; surgeons, cardiologists & so on. And who has not heard of surgeons amputating the wrong leg or foot. So should the doctor (or better yet the patient) perform the surgeries himself!

As to the quality of the in-house actuary being superior and the business owner having a better idea of what the actuary knows and is doing, I would disagree. Anyway, if the business owner was that knowledgeable, why would he hire the actuary? If he does have some knowledge then he is more apt to dictate to the actuary how to do his job and that's not a desirable situation!

Share this post


Link to post
Share on other sites

Doug,

Appreciate it a lot. Got my Q's from a link provided on this board a few weeks ago. I was bummed that I only got 5 decimal places, but such is life. I'll look up your cites and see if I can right the boat.

Share this post


Link to post
Share on other sites

Now I know what it must feel like to be bipolar. Two conversations in one thread. I apologize for starting the 2nd, but I like the dialogue.

SRM:

I think that an actuary that is also investment-licensed and investment experienced is in a unique position to determine the appropriate asset allocation for a DB Plan.
I definitely agree with this statement. I was referring to those who were not investment licensed.

You all make good points. I just think sometimes some benefit professionals try to offer more services than they are really qualified. Too often we are tempted to do things because we can, without thinking if we should.

Obviously, an actuary is a critical part of the plan design and document drafting process, but there is a big difference between assisting and writing. I feel I know the Regs as well as the attorney's I work with, I wouldn't work with them if they didn't and they wouldn't work with me if I didn't. But, if I come up with some crazy design that pushes the envelope, I want to make sure I have a good ERISA attorney reviewing it and defending it if challenged.

I have seen major banking institutions who want assets so bad they offer the Plan Documents for free. The client doesn't know any better so the big bank puts them on to a prototype that they bought from the big prototype provider. You explain that it doesn't fit, so they tweak it so that the round peg fits the square hole. Then you get a late retirement; find the prototype language is so bad that whole lines of text are missing, so you call the big bank to ask for an interpretation of "their" document. They are clueless and pass you on to the prototype provider who promises to check into it when the big guy returns next week. This goes on for 2 years.

Personally, I think it was wrong for the big bank to offer to do the documents. They do it because they think it will help get the assets. The prototype provider doesn't care, he's just selling a document. If the big bank would focus on what they do and get better investment returns, they wouldn't have to offer services they aren't qualified to provide. Some Actuaries/TPA's do the same thing. They think they need to provide the documents in order to get the business. Some do a fine job with the documents, but some are a real piece of crap. Just cause you can buy a prototype document doesn't mean you should put all your clients on it. This type of situation was at the core of my statement.

I will now dismount from my soapbox.

Share this post


Link to post
Share on other sites

Get back up, Effen, you're doing fine.

I know a lot about investments, but wouldn't (couldn't) have lasted 24 years giving investment advice.

How many of you fine folks have had a potential client walk in the door with 4 or 5 signed prototypes, one from each investment house? They think they have 5 Plans. Maybe they do. What do I know. Hope they file 5 5500s ;-}.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...