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April 2008 Q 4 AAAL

B

barney

Member
Hi,

In this question the Attained Age Actuarial Liability is calculated in part (i). It is the past service liability in respect of actives and deffereds and pensioners.

However, in part (iii), the AAAL is used in another calculation but the figure used is not the figure calculated in part (i). The figure used in part (iii) is the past service liability in respect of actives only.

Why is this?
 
Hi barney

In part (iii) you are being asked to calculate the CUSCR. Remember that there are two elements to the CUSCR:

1) the present value of benefits earned in the control period, based on service in the control period and salaries at the end of the control period, plus statutory revaluation and

2) the increase in the CUAL due to salary increases in the control period being in excess of statutory revaluation.

Your query relates to element (2). Only the actives' actuarial liability will increase by salary increases rather than statutory revaluation. Hence we don't include DP and pensioner AAAL in our calculations. The examiners expected candidates to calculate the actives' CUAL from the actives' AAAL.
 
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