Apr 21 Q2

Discussion in 'SA2' started by Actuary@22, Sep 13, 2023.

  1. Actuary@22

    Actuary@22 Very Active Member

    Hi

    Pls explain why in Q-2 i)
    pricing may make prudent assumptions on dependents benefits [½]


    Thanks
     
  2. Lynn Birchall

    Lynn Birchall ActEd Tutor Staff Member

    The company only receives data about the pension scheme members. However, the annuities the company has to pay all have dependants' benefits associated with them. The company will therefore have to have made assumptions in relation to these when pricing the annuities, eg about the age of any dependants.
    If the company made prudent assumptions in pricing, and the actual experience in relation to the benefits paid is better than assumed, that would be a source of profit.
     

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