1. Actuarial Assumptions
Art83 WG Meeting
Actuarial Assumptions
Item 5 of the Agenda
Art83WG / Doc Art83_05

2. Summary of assumptions Real Discount Rate (RDR)
Content
Assumptions update
Summary of assumptions
Real Discount Rate (RDR)
General Salary Growth (GSG)
Individual salary progression (ISP)
Invalidity table
Art83WG / Doc Art83_05

3. Frequency of changes (in years)
Assumptions update
Overview of actuarial assumptions used in 2007 assessment Updating of assumptions according to Annex XII
Assumptions
Frequency of changes (in years)
Discount rate (RDR) 1
General Salary Growth (GSG)
Individual Salary Progression (ISP)
Not defined
Life table (EU-2004 Life table) 5
Average retirement age
Invalidity table (EU-2007 Inv. Table)
Other assumptions
Art83WG / Doc Art83_05

4. Summary of assumptions
Art83WG / Doc Art83_05

5. Real Discount Rate (RDR)
12-year moving average :
deflator index (2.2%):
- no problem
nominal rate (5.6%):
data not available from August 2005 until December 2006
ECB will not publish 2006 annual average before the 1st September
Eurostat estimate of 2006 rate (4.2%) is based on 30 years Euro area benchmark government yields produced by ECB
RDR (3.4%):
This estimated RDR will be used in the final assessment
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6. Nominal Discount Rate
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7. RDR – Moving average
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8. RDR 2004 to 2011
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9. General Salary Growth (GSG)
GSG = yearly update of pay scale
Art83WG / Doc Art83_05

10. Specific Indicator (SI)
GSG = yearly update of pay scale
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11. General Salary Growth (GSG)
2006 net SI = 0.2%
2006 GSG (12-year moving average ) = 0.5%
2005 GSG (12-year moving average ) = 0.3%
→ GSG increase (+0.2%)
Art83WG / Doc Art83_05

12. Individual Salary Progression (ISP)
The ISP table has been updated to take account of:
Decisions taken at the meeting of Art83 WG
The use of new salary scale (Former categories A*, B*, C* D* have been replaced by function groups AD and AST)
The 2006 observed promotion rates
ISP refers to promotions and seniority steps
Art83WG / Doc Art83_05

13. ISP – Population by ISP groups
ISP refers to promotions and seniority steps
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14. ISP – Population changes
ISP refers to promotions and seniority steps
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15. ISP – Promotion rates 26.06.2007 Art83WG / Doc.20060626 Art83_05
ISP refers to promotions and seniority steps
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16. ISP – Average 26.06.2007 Art83WG / Doc.20060626 Art83_05
ISP refers to promotions and seniority steps
Art83WG / Doc Art83_05

17. Invalidity Table
Invalidity rates have been checked according to Art83WG delegates requests (2006 Art83 WG. Action 2)
The result of the test showed that the EU-2004 Invalidity table overestimated real invalidity
An updated table (EU-2007 Invalidity table) has been used in the calculation
Art83WG / Doc Art83_05

18. New invalids
A new category of invalids according to Staff Regulations in force from :
New invalids continue to contribute to the PSEO
The invalidity allowance = 70% of the current BS while former invalidity pension = 70% of the BS at the normal retirement age
Invalidity allowance is converted into a retirement pension at the normal retirement age (65 years old)
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19. Invalids by age
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20. The 2007 EU-Invalidity table
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21. The 2007 EU-Invalidity table
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22. Invalidity changes
2004 and 2007 Invalidity tables refer to different populations:
The 2004 invalidity table is not as reliable as the 2007 one, since the earlier one was based on:
a smaller population (only data from the EC instead all institutions and agencies),
an invalidity table from the Coordinated Organisations (in which population structure and invalidity conditions are different from the European Institutions).
Art83WG / Doc Art83_05

23. Invalidity changes Delegates are invited to give their advice on:
the new 2007 EU-Invalidity table
the proposal on updating the table each year, using as input a moving average of 5 years of invalidity observation.
Art83WG / Doc Art83_05

24. Conclusions
The Working Group is asked to express its views on the issues discussed in this paper
Thank you for your attention
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