Hi
That (1.015/1.026)^15 is not a basis change, it is to allow for the fact that, in the question, we are told those who accept the TV offer are, on average, 15 years younger than the average age of all DPs (30 vs 45).
So the line of calculation you are referring to (which is estimating the liability of those who take an ETV) essentially says:
Total DP liability is 80.5m ...
... 30% of DPs take up the offer, so multiply by 0.3 ...
... but those who take up the offer have lower deferred pensions than the average, so multiply by 30,000/50,0000 ...
... and those who take up the offer are 15 years younger than the average, so the liability in respect of these members is going to have 15 years more discounting at the net rate (1+r)/(1+i), so multiply by (1.015/1.026)^15
Hope that helps!
Last edited: Sep 15, 2023