Consideration of life expectancy in the pure contribution commitment

Overview

The following sections of the results report contain aspects to consider when selecting the biometric calculation basis for the longevity risk in the context of pure defined contribution plans. Firstly, it addresses current period mortality rates, which can depend heavily on the insured group. Secondly, it addresses the development of the mortality trend, about which a statement is generally only possible with the use of additional data. As a result, by combining a baseline table suitable for the group with a trend derived from long-term observations of extensive portfolios, longevity can be adequately taken into account in the pure defined contribution plan. To enable the pension institution or the social partners to classify the trend function they use, the actuary should provide transparency regarding possible alternatives and present at least one comparative calculation based on the resulting benefit conversions using the starting trend of the DAV Pension Table 2004R second-order and the baseline mortality rate they select. This overview serves only as a first orientation and does not replace consideration of the subsequent statements in the results report.

Further information and background information can be found in the IVS results report "The Pure Contribution Commitment Pursuant to the Occupational Pension Strengthening Act" of November 16 and 21, 2017 [IVS 2017], as well as in other results reports on the pure contribution commitment.