I've come across the following general formula for the standard contribution rate:
In the same source document that I'm consulting, with reference to this formula, there is a comment which says:
"You will notice that if r = e, the SCR will change only due to second order effects if i and e both change.
This means that there will be cases where CUSCR is sensitive to changes in the discount rate, even if the gap between i and e remains constant."
Could someone possibly help me understand these comments?
1) I assume that by "second order effects" it is meant that i and e can both change with no impact on the SCR as long as the difference between i and e remains unchanged, in the case of r = e; and
2) With respect to the second sentence, I assume this is supposed to refer to when r and e differ?
In that case, the CUSCR is further sensitive to changes in r regardless of whether the relationship between i and e is maintained.
Is that the full intended meaning?
I would appreciate any direction.