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  #11  
Old 03-09-2018, 05:48 PM
Mihar123 Mihar123 is offline
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What type of changes are we supposed to recommend? Is the question simply asking us to determine if x assumption should "increase" or are we do need to be more specific and explain how exactly it needs to be changed, x assumption should increase to y%?
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  #12  
Old 03-09-2018, 05:53 PM
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Charlie the Unicorn Charlie the Unicorn is offline
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I did the latter and passed.
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  #13  
Old 12-13-2018, 04:01 PM
actuary28 actuary28 is offline
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Quote:
Originally Posted by Charlie the Unicorn View Post
I did the latter and passed.
how did you determine the magnitude?

Thanks!
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  #14  
Old 12-14-2018, 01:17 AM
noone noone is offline
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This seems like the easiest task yet this task was called out on my second fail. For each assumption I
- Made an observation on how the experience differed from the model
- based on the above observation I recommended an increase, decrease or no change to the assumption
- I quantified my recommended change and provided a percentage increase or decrease to the recommended tax
- I also mentioned the overall impact to the tax based on all changes.
An example might be something like, "The experience shows that there were 300k less persons employed over the previous 5 year period. Considering a recommended tax of 750 per person, this resulted in a loss of 225m. Due to this observation I recommend that the model be adjusted so that the employed persons assumption is reduced by 50k a year. This will result in the recommended tax increasing by approximately 10%."

Also what reports did you use what will provide a warning? I am not really sure what they mean by "warning". If this report had been implemented at the start, how would it of warned us of the poor experience that we saw over the first 5 years? If your annual return was -15% for one year is that a warning that your fund sucks or just normal volatility that you will expect to see over a 30 year period?

And you can't really produce a report that measures inflation or provides employment statistics. These will have to be provided by the government. I mentioned this in addition to other reports.

I think this question is supposed to bring it full circle with respect to the actuarial control cycle but I guess I was not able to demonstrate that I understood this.

I would appreciate your take.

Last edited by noone; 12-14-2018 at 01:19 AM.. Reason: spelling
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  #15  
Old 09-20-2019, 07:58 PM
PinballWizard100 PinballWizard100 is online now
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Can anyone follow up on the question above? I was marked off on question 6. I feel okay about coming up with informative reports.

Are we supposed to recommend a change to the tax rate at time 5? Or are we recommending what the tax should have been at year 0. Are we assuming that they used our cost recommendation initially?

Also, if we assume they didn’t use our tax rate, are we supposed to tell them the percent increase/decrease to the tax rate?
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  #16  
Old 09-21-2019, 09:30 AM
seanspencer seanspencer is offline
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The question asks for recommended changes to the assumptions - you don't need to recommend or even recalculate the tax rate (it says don't recalculate the tax).

As someone else already said, your sensitivity tests should help you estimate the effect of a recommended assumption change.

Also, just because actual experience didn't match an assumption does not mean the assumption should automatically change. Why would you want to change an assumption? On the other hand, why wouldn't you change it to match experience?
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  #17  
Old 09-21-2019, 01:17 PM
PinballWizard100 PinballWizard100 is online now
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Quote:
Originally Posted by seanspencer View Post
The question asks for recommended changes to the assumptions - you don't need to recommend or even recalculate the tax rate (it says don't recalculate the tax).

As someone else already said, your sensitivity tests should help you estimate the effect of a recommended assumption change.

Also, just because actual experience didn't match an assumption does not mean the assumption should automatically change. Why would you want to change an assumption? On the other hand, why wouldn't you change it to match experience?
The task says “Based on your recommendations, what is the likely effect on the tax per employed person? Addressing the general direction and magnitude are sufficient; you do not need to recalculate the tax.”

My interpretation of this is that we need to calculate the approximate percent change in the tax. The only reason we aren’t told to calculate the tax is because we don’t know the tax rate the CDEF fund used. Am I misinterpreting?
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  #18  
Old 09-21-2019, 01:27 PM
flyfry flyfry is offline
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Quote:
Originally Posted by PinballWizard100 View Post
The task says “Based on your recommendations, what is the likely effect on the tax per employed person? Addressing the general direction and magnitude are sufficient; you do not need to recalculate the tax.”

My interpretation of this is that we need to calculate the approximate percent change in the tax. The only reason we aren’t told to calculate the tax is because we don’t know the tax rate the CDEF fund used. Am I misinterpreting?
I spoke to the percentage change each of my revised assumptions had on the tax. I don't think this is required though, which is why the directions state "general direction & magnitude are sufficient". I did not want to leave any room for doubt so did a little extra work.

Also, pretty sure you can figure out the tax rate that was used... Are you not given both the total contributions and # employed for the first few years?
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  #19  
Old 09-22-2019, 12:33 PM
ARodOmaha ARodOmaha is offline
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Quote:
Originally Posted by flyfry View Post
I spoke to the percentage change each of my revised assumptions had on the tax. I don't think this is required though, which is why the directions state "general direction & magnitude are sufficient". I did not want to leave any room for doubt so did a little extra work.

Also, pretty sure you can figure out the tax rate that was used... Are you not given both the total contributions and # employed for the first few years?
You can calculate what the historical tax rate was, you're right. But I don't think the future tax rate can be estimated exactly because of the GoalSeek process and you wouldn't know what the committee decides on.
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