Faculty of Actuaries

Institute of Actuaries

September 2004 Subject 424 — SA Fellowship Pensions Paper One MARKING SCHEDULE


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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule



Investment risk passes from the company to the members. The DB fund could come to have a poor funding position, eg due to mismatching and fall in market value of investments,

[½] [½]

concerns about financial impact of Surplus Act on DB schemes (minimum benefits, minimum pension increases, surplus apportionment). [1] giving rise to an increase in, and uncertain, funding requirements, and possibly requiring large lump sum inputs in the short term, Demographic risks eliminated under DC. [½] [½] [½]

Some DB expenses would not necessarily be incurred under DC, e.g. cost of actuarial advisers, but such savings might be offset by increased expenses in other areas. [½] Implementing AC116 (or foreign accounting requirements) gives rise to volatile impact on company accounts for DB schemes. [½]

Which in case of offshore parents can be aggravated by extreme movements in exchange rate. [½] Consistent with the actions of competitor firms. DC fund perceived to be fairer for early leavers. And possibly easier to explain to potential members. [½] [½] [½]

Eliminates potentially generous and expensive options built into DB rules, e.g. for early retirements [½] DC fund perceived to eliminate so-called “cross subsidies”. [½]

Concerns about the possible impact of future legislative requirements on DB schemes. [½] Easier to tie in with the provision of “cafeteria” (or “cost to company”) style of benefit provision overall. [½] [8½ out of 5]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule


Advantages: Strong likelihood of improvement in value of benefits for very early leavers, [½] especially those at very young ages, because minimum benefits require inclusion of 100% of company contributions used for “savings” element under DC for early leavers, [½] [½]

but improvement could be contingent on actual investment returns not being very low or negative. [½] Members gain benefit of good investment performance, if “smoothed” approach not adopted. Possibility of individual member choice in investment medium. Option to decide how much investment risk to take. Possibility of “living annuities” and creation of an estate. [½] [½] [½] [½] [½]

Possibility of other annuity that “fits” member’s circumstances better than provisions of DB fund. [½] Disadvantages: Loss of DB guarantees. [½]

Loss of “needs based” benefit provision, especially on death in service and on ill-health retirement, [½] which often replaced with very inappropriate risk benefit provision. Strong likelihood of lower benefit package overall, particularly for those who stay in service to retirement. [½] [½] [½]

Which can actually make change to DC very expensive in medium term because of need to give guarantees (as consequence of reduction in package). [½] Likely poorer benefit in case of early retirement (often loss of generous provisions that give rise to early retirement subsidies). [½]

Likely less generous provisions in case of ill-health retirement (especially where ill-health pension was based on potential service). [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Any associated separate disability scheme benefits subject to conditions of acceptance of insurer (which usually far more onerous). [½] Generally a surviving in service spouse or children must make own arrangements in respect of lump sum death benefit, and lump sum often inadequate, especially at younger ages. So-called “cross subsidies” not necessarily eliminated, especially on cost of risk benefits, [½] [½] [½] [½]

and allocation of expenses (usually debited to members on per cent salary basis). [½] Members commonly bear risks of escalating risk benefit costs, [½]

particularly as consequence of AIDS or deteriorating experience of insurer for reasons not associated with Fund but other schemes. [½] Problem is that under DC there is no self-insurance in SA as general rule and funds pay price set by insurers. [½] Members bear cost (through lower benefits) of use in most cases of insurance products (expenses, commissions, margins and profit loadings). [½] Members bear cost in medium and smaller funds of “no credibility” attributed by insurers to good in service mortality experiences. [½] Members bear risks of poor investment performance, [½]

and might additionally bear consequences of a “smoothed returns” policy. [½] Members bear risks of the terms on which the fund account is converted into pension at retirement, [½] including longevity risks in case of “living annuities”, or including use of guaranteed, or no, escalations in normal annuities. Members most often bear full investment and administration costs. [½] [½] [½]

Generally no possibility of discretionary increases in course of payment [½] [18 out of 5]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule



Segregated fund — advantages: Full control over choice of mix of assets between various sectors. And choice of individual assets within each sector. Full benefit of good investment performance. [½] [½] [½]

Costs of managing own pool of assets is cost effective for large schemes. [½] Generally good liquidity, excluding any part in property. [½]

Can arrange asset/liability modelling and matching exercises on pensioner assets and liabilities. [½] Possibility of investing in index-linked bonds. Segregated fund — disadvantages: Costs of managing own pool of assets may not be cost effective for small schemes. [½] No investment guarantees. Possibly more onerous risk controls and governance structures. Insurance company pooled managed fund — advantages: Direct exposure to investment markets without the necessity to invest in individual stocks. Gain benefits of diversification, again without holding actual stocks. [½] [½] [½] [½] [½]

Generally, with certain provisos, reasonable liquidity conditions exist or can be negotiated. [½] Explicit scale of investment expenses. Insurance company pooled managed fund — disadvantages: No investment guarantees. [½] [½]

Income reinvested, so not available for cashflow without disinvestment of assets. [½] Investment expenses may be higher than for a segregated fund, especially for a large fund. [½]
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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Can be liquidity conditions on disinvestment, especially in regard to any part of managed fund invested in property.

[½] [½]

At present time no suitable fixed interest funds available in SA for matching pensioner profile. [½] “Guaranteed Fund” — advantages: Generally “smoother” investment returns. Provision of certain investment guarantees. Possible arbitrage opportunity. “Guaranteed Fund” — disadvantages: Will not gain immediate benefit of good investment performance. In falling markets, some adjustment to any unvested account balance is possible. Any capital guarantees must obviously come at a cost, [½] [½] [½] [½] [½] [½]

which it should be assumed can be substantial, especially if full guarantee. [½] Possible loss of any unvested account balance on surrender or transfer to alternative investment medium. [½]

When ongoing cashflow insufficient, benefit payments sometimes made from vested account only, thereby causing increase in proportion of assets in unvested account. [½] Over time the unvested component (or the equivalent in a fund with full guarantees) will in any event increase from zero initially to as much as 30% or more of total assets, adding to liquidity disadvantage. [½] Often a delay in implementing a transfer to alternative investment medium, especially if markets have fallen. [½] Possible penalty if a transfer of members to another pension fund or if alternative investment medium. [½]

Can be onerous conditions regarding time-period over which payments spread on disinvestment. [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Income / dividends from underlying assets reinvested, so not available for cashflow. [½] Charges implicit and may be disproportionately high, especially for a large fund [½] Lack oftransparency. [½]

Actions in respecttransparency (including effect of other funds in guaranteed pool could adversely affect returns (that is, arbitrage aspect).pool). [½] [19½[18½ out of 7] (ii) Investment objectives of Fund and level of risk that is acceptable to trustees. [½] Assets available (after any penalties) on surrender or transfer. Factors affecting future returns. [½] [½]

Enhancements available if assets switched to managed fund with same insurer. [½] Compare discounted value of assets, allowing for expected future returns, with the surrender value offered. [½] Guarantees available under “guaranteed fund” contract [½] [3 out of 3]



The provisions of the rules in regard to individual transfer values.


Reason for the emergence of shortfall — benefit improvements, experience losses or change of basis. [½] Steps being taken to address the shortfall. Level of transfer activity. [½] [½]

Legislative — as an ongoing fund, the fund is within the 12-month window period before minimum benefits become obligatory. [½] Rules, in particular any priority order for preferential liabilities. Acting in the interests of all members. Is fund likely to wind-up shortly? Members’ reasonable benefit expectations. [½] [½] [½] [½] [4½out of 4]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule


Minimum Benefit Valuation Balance Sheet R 000’s Assets: Liabilities: Pensioners: Deferreds: 40 004(1.005−15) Actives: 49 995(1.015−20) Total (a) Overall funding level = 120 000 / 134 851 = 89% One possible reduction = (100 − 89)% = 11% (b) Treating Pensioners as a priority category and stripping them out. Assets: 120 000 – 60 611 = 59 389 Liab’s: DP: 37 120 Actives: 37 120 Total 74 240 Funding Level = 59 389 / 74 240 = 80% [½] 120 000 60 611 = 37 120 = 37 120 134 851

[½] [½] [½]

[½] [½]

Another possible reduction = (100 – 80)% = 20% [½] Other assumptions: Expenses of paying/calculating transfer values are ignored (or included within the financial assumptions) [½] Final salary is the annual rate on the date of the valuation with salary reviews once a year on 1 January. [½] Average term to NRD is not distorted when weighted by the relevant liability. [½] [3 out of 3] (iii) Stating reduction percentage Suggest when 100% transfer values likely to be restored. Detail steps being taken to rectify situation e.g. increased contributions. [½] [½] [½]

Why reduction necessary e.g. protection of non-transferring members’ rights. [½] [2 out of 2] [9½ out of 9]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule



Trustees investment objectives should represent best judgement to meet liabilities given likely pattern of future contributions, taking account of attitude to risk, including that of employer as sponsor.

[½] [½]

Strategic asset allocation should reflect contribution towards achieving fund’s investment objectives. [½] Consider full range of investment opportunities. Asset allocation should reflects fund’s own characteristics. Trustees should adopt a clear investment policy, giving a mandate to investment managers on objectives, risk parameters and benchmarks. [½] [½] [1]

Statements from A, B and C, respectively, cover specific risks, but do not cover all prospective beneficiaries or all issues. [½] And expose the fund to the possibility of shedding its property investments at prices that might be unattractive, [½] without any consideration of the suitability of this action or the time constraints of implementation. [½]

A: Return on index-linked bonds depends on the market value at particular points in time, [½] which will be affected by supply and demand, and any changes in the real rate of return over time. [½] [½]

Hence return does not necessarily match inflation unless held for full term. [½] And hence may not match the fund’s liabilities related to price inflation. [½]

Especially after taking into account retirement funds tax in regard to liabilities in respect of any deferred pensioners. [½] And is unlikely to match salary inflation. Although it has grown, the market in index-linked bonds is very small, with consequent liquidity and trading issues, and potential matching issues, even for pensioner liabilities. [½] [½] [½] [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

B: Suitable for matching liabilities fixed in monetary terms, but not salary related liabilities, or liabilities related to pension increases consequent upon inflation. Possible return is subject to consideration of credit risk.

[½] [½] [½] [½]

This trustee appears to have been influenced by accounting requirements and not the specific liability requirements of the fund. [½] C: Investment in equities with main operations in SA is suitable over long term for meeting liabilities related to salary. [½] But not liabilities fixed in monetary terms — current level of pensions. And not best hedge for pension increases related to price inflation. [½] [½]

Investment in SA equities with earnings totally or mainly in US Dollars leads to currency risk, [½] and risk associated with precious metal prices, oil and commodity prices, which can be quite volatile. [½] Currency risk will remain if the Rand does not stabilise in value against Dollar, [½]

and in any event it would be too speculative to base an investment policy on premise of stability of exchange rate. [½] However, some investment in SA equities with earnings mainly in US Dollars has attractions given that exclusion of such companies severely limits investment opportunities. [1] Also such investment provides hedge in event of a Rand that depreciates against the Dollar,. and hence against that element of inflation that is a consequence thereof. [½] [½]

An overall equity allocation of 75% is at maximum level per Regulation 28 . [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Balance in selection of bonds with small residual in cash provides diversification, and helps to ensure that fund meets requirements of Regulation 28, with potential for some matching of current level of pensions. (ii)

[½] [½]

[½] [20 out of 8]

The trustees should consider the following asset classes, subject to overall investment objectives and risks. [1] SA equities including equities with offshore earnings (but not exclusively those with major part in offshore earnings); that is include equities with generalised foreign earnings as risk spread. To match salary related liabilities Reasonable range, 30%–50%, say Overseas equities: As diversification. To match salary related liabilities, but with a currency risk. Reasonable range, 0% up to maximum allowed of 15%. SA property: As diversification. To match salary related liabilities. Reasonable range, 0% to 15%, say. [½] [½] [½] [½] [½] [½] [½] [½] [½] [½] [½] [½]

Fixed interest: Reasonable range, 15% to 30%, possibly double if index-linked bonds not obtainable in desired quantities or duration at “fair” price. [½] To assist in matching fixed liabilities to extent required duration obtainable, [½] and to assist in matching benefits that increase according to a price index. [½] and to provide diversification for liabilities of active members. [½] Corporate bonds to sweeten yield, but suggest small exposure. [½] as for RSA bonds, but with a credit risk. [½] Index-linked bonds (to extent obtainable at “fair” price, bearing in mind minute market): Assist in matching benefits that increase according to a price index. Holding up to say 36% (ratio of pensioner to total liabilities). [½] [½] [½]

Cash, % as required [½] To meet immediate liabilities [½] e.g. admin costs, transfer values, withdrawal & other lump sums. [½] [Total 13 out of 7]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule


Specify the problem(s) • • He has benefits currently of value R10.8m on a transfer basis; value may even be higher on the statutory basis for valuing benefits. [½] Even if no future accrual, these will increase in value as he approaches retirement (DB) or with investment income (DC), and will exceed R12.0m. [½] − So he is likely to suffer some penal tax unless benefits can be “banked” − ..or there is a high level of indexation on the R12.0m. • • • • ..or he can persuade his former scheme to settle the tax (unlikely?) [½] [½] [½]

So it is likely that he will receive less net income than he might otherwise have expected [1] Pension earned after the introduction of the limit will almost certainly all suffer the penal tax [½] ...but he has an opportunity to try and negotiate a package with his new employer that will leave him “no worse off” than if the limit didn’t exist [1]

Decisions to be taken Existing benefits • keep as DB or transfer to DC (assuming currently DB)? − DC for simplicity of knowing where he stands relative to the limit − DB for known gross benefits but uncertain tax charge/net benefits • • [½] [½] [½]

How should funds be invested if DC (select investments to match increases in limit or still look to maximise returns, notwithstanding additional tax charge) [1] Transfer to new employer or leave where they are? (if transfer, more likely that new employer/scheme might cover the additional tax charge?) [½]

Future Accrual • Form and level of “pension” benefits from new employer − Retirement benefits − Other related benefits traditionally provided in pension scheme (death benefits, ill-health) • [½]


Possibility of maximising pension accrual before the date the limit is introduced if funds over R12.0m can be “banked” [1]
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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Information we need to find out....... About the individual • Current circumstances − − − − • Whether he has dependants (spouse, partner, children) Other wealth (investments, property, share options etc.) Any other approved pension benefits? Current outgoings [½] [½] [½] [½]

Future expectations − Likely changes in above − Plans for retirement (when, desired standard of living) − How long does he see himself in this job [½] [½] [½]

Knowing the above will help us understand • • • • • Constraints on flexibility to select benefit package [1]

or need to provide protection benefits separately (e.g. if extra salary is substituted for instead of pension) [½] Need for diversification of investments Preference between long-term savings and immediate income Desire for security of benefits [½] [½] [½]

Also need to know more about existing pension • • • • • Is he already subject to some form of limit on tax-approved pension provision? [½] If so, did previous employer provide unapproved pension benefits or cash/other benefits as compensation (or nothing)? [½] ..i.e. what is his expectation of approved/unapproved pension provision (irrespective of introduction of the limit)? Were benefits DB or DC? Payable from what age?

[½] [½] [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Any favourable early retirement terms not allowed for in the transfer value (can increase benefits in value from R10.8m to significantly more than R12.0m) and might create unexpected penal tax charge?) [1] What did his contract promise? [½]

About the New Employer Assume that the new employer wants the package to be attractive to the individual [½] ... but at an acceptable level of costs [½] • May have very specific objectives about how they want to structure the rewards for this individual however? [½] − Long lock-in, or fully expects him/her to move on in 3-5 years − How much of the package should be performance related? • Will want to consider − Available tax concessions − (one less now, may shift balance, create opportunity for increasing the performance related element of the package — pensions typically aren’t) − Costs (admin & management time) − Stability, durability and realism of costs (in cash and accounting terms) − Requirement to disclose senior employees benefits packages [½] [½] [½]

[1] [½] [½] [½]

− Benefits provided to other senior employees (if compensates this individual for penal tax charge, what about existing staff in similar situations) [½] − What should the individual contribute to the cost of providing benefits (particularly if pension scheme was contributory but taking future benefits in a different form) [½] • • What does any draft contract promise in respect of pensions (particularly if prepared before the limit was announced)? [½]

Existing practice for members affected by any limit on tax-approved benefits? [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

About how the limit will operate • • • • • • Any grandfathering? [½] How will it increase? [½] Annual limit on future accrual? [½] Who settles the tax and how (if DB)? [½] Factors for valuing DB pensions? [½] Any other restrictions being introduced e.g. on earliest age at which retirement benefits can be taken [½] [½] [½] [½] [½]

Need to consider risks to member of switching to non-pension provision • • • • Salary-linkage of benefits at retirement lost Longevity risk transferred to individual Investment risks transferred to individual

Security may be reduced (if alternatives are deferred, unfunded or linked to health of employer) [½]

...so, should individual seek more than monetary equivalent of value of pension to compensate (employer may argue that pension wasn’t fully secure either?) [1] [34 from 24]



General / Constraints Assumptions are the responsibility of the “enterprise” in terms of AC116 (hence they are responsibility of the directors). [½] While not stated it follows that the directors should be seen to be taking actuarial advice. [½]

The assumptions are an enterprise’s best estimates of the variables that will determine the ultimate cost of providing benefits. [½] The assumptions must be unbiased (neither imprudent nor excessively conservative). [½]

The assumptions must be mutually compatible (inflation, salary increases, investment return and discount rates). [½] Where appropriate only, there should be consistency from year to year. [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Financial (a) Financial assumptions should be based on market expectations, at the balance sheet date, for the period over which obligations are to be settled. [½] Discount rate — set with regard to the yield on high quality corporate bonds, [½] or if no “deep market” in such bonds, then government bonds. [½] Currency & term of bonds to be consistent with that of the liabilities. [½] There should be no allowance for credit risk. Or actuarial or investment risk. There is a very limited range of bonds that are suitable by term. For example, only the government bonds R150 & R153, both relatively short, have a large turnover. And the R186, while more suitable from point of view of term, has always been priced at a premium to other bonds, hence lower yield. [½] But we can also be guided by yield curve. [½] Hence there could be some scope for justifying a higher discount rate, [½] than is shown to be suitable by market conditions. (b) [½] [½] [½] [½] [½]

Expected return on assets — is a component of expense recognised in income statement (& ultimately profit and loss a/c) but not the balance sheet. [½] Therefore presumably less of a concern to the FD, hence of less significance. [½]

Should be a reasonable, long term expected, return for the appropriate class of asset. [½] Reduced by “administration” costs (all fees including investment). [½] And by allowance for Retirement Fund Tax payable by fund. Some flexibility in initially setting this assumption. [½] [½]

But any year on year change would have to be properly motivated. [½] (c) Inflation — actuary & directors might be guided by a market derived basis. (Nominal bond yields vs. Index-linked bond yields), [½] but AC116 does not prescribe a methodology. [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

It requires recognition in salary increases, and pensions to extent there is a history of increasing benefits to mitigate effects of inflation, [½] hence some flexibility if a change properly motivated, [½] but must have regard to the pension increase policy of Trustees in terms of Pension Funds Second Amendment Act, [½] and the minimum pension increase in terms of that act. [½] (d) Salary increases on account of merit, productivity and supply & demand — fund specific and hence some flexibility [½] represents realistic long term estimate and so unlikely to change much year on year. [½] Unless company remuneration structure and/or pensionable pay definition changes. Would be in line with funding valuation. Demographic (already stated that these must be best estimates) Would be guided in first instance by funding valuation. Experience should be analysed (use funding valuation analysis). [½] [½] [½] [½]

Possibly some margin in pensioner mortality basis given that prudence would have required actuary to allow for improvement. [½] But caution to be exercised in removing such margin. [½] Might be some scope for “tweaking” other assumptions, [½] particularly if last funding valuation some years ago and recent experience indicates a less cautious approach. [½] [20½ out of 15] (ii) (a) Salary experience Expected actives liability 31/3/2004 Accrued + 1 year liability + interest (10.0 + 2.5) × 1.10 = 1.375 Actual = 1.355 Gain = 0.020m


Since no new entrants and no exits from actives (no benefit outgo in respect of actives and no commutations) then all the gain must be from salary experience. [½] Estimated actual rate of salary increase (1.355/1.375 × 1.087) − 1 = 7.12% [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule


Expected fund at year end and gain/loss: Determine ratio of pensioners’ liability to actuarial value of assets to find approx tax-free component = 12 / 24 = 50% tax-free Therefore taxable component = 50% [½] Retirement Funds Tax (RFT) as a return: Expected interest as return = 0.4 × 10.0% Expected tax as return 50% × 18% × 4.0% Expected return = 0.4 × 10.0% + 0.6 × 12.0% RFT Administration costs Expected rate of return NCF = net cashflow NCF = (3.5 – 0.8) = 2.70m = 4.00% = 0.36% = = = =


11.20% gross [½] 0.36% 1.00% 9.84% [½] [½] [½]

Assuming cashflows in middle of year, we have: Expected fund = 29 × (1.0984) + 2.70 × (1.0984)½ = 34.683m Actual fund = 24.000m Loss = 10.683m Estimated actual net rate of return (24 − 29 – 2.7) / (29 + 0.5 × 2.7) (c) Administration costs: Expected costs = (0.01 × 29 + 0.005 × 2.7) Actual costs Loss (d) Retirement Funds Tax: Taxable component as before Expected taxable income 10.0% × 0.4 × (29 + 0.5 × 2.7) Expected tax Actual tax Gain 50% × 18% × 1.214 = 50% = 1.214 = 0.304 = 0.330 = 0.026m = −25.4%

[½] [½]



= 0.109 = 0.090 = 0.019m [½] [7 out of 5]



Total liabilities were estimated as = 33.6m at 10%

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Therefore at 12.0%: 33.6 × (1.10/1.12)14 = 26.109m Balance sheet: Market Value of Assets PV of liabilities Shortfall = R24.000m = R26.109m = R 2.109m




Total liabilities were taken as Deferreds + Pensioners Actives If we let the mean term of the active members then: (13.55 × N + 20.05 × 10) / 33.6 so that mean term of the active members N Then revised value of liabilities of actives: 13.55 × (1.10/1.12)20 × (1.0725/1.087)20 And revised deferreds & pensioners: 20.05 × (1.10/1.12)10 So revised total New balance sheet Market Value of Assets PV of liabilities Surplus

= = = = = =

33.600m 20.050m 13.550m N 14 19.9 as 20

[1] [½] [½] [½]

= 7.224m = 16.744m = 23.968m

= R24.000m = R23.968m = R 0.032m [½] [4 out of 3] [½] [½] [½] [½]


Discount rate now 1.5% above yield curve vs. yield curve in prior year. Not consistent. Very large jump. Above likely to give rise to queries, from auditors.

Likely to be at top end of range of corporate bond yields, or even over. [½] Also matching of fixed component of liabilities difficult, maybe impossible. [½] Salary increase has been set (approx.) equal to actual rate in previous year. [½] But rate should be long term. [½] It is now very close to inflation, which evidence would suggest is imprudent / unrealistic over the long term — not enough allowance for merit etc.. [½] Again no margin at all or scope for reduction in future years. [½]

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Subject 424 (SA Fellowship Pensions) — September 2004, Paper 1 — Marking Schedule

Basis is actuarially unsound as regards both interest and salary increases. [½] [5½ out of 4] [37 out of 27]


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