A Method of Estimating the Effect of a Change in a Set of Decremental Rates

Extract

Three of the writer's earlier notes in this Journal (see References) have discussed respectively the effect, upon pension fund contribution rates, of changes in the salary scale, the rate of interest and the entry age, and approximate methods have been supplied for estimating rapidly the effects of the two last-mentioned changes. The object of the present note is to propose a method for estimating the effect on the survivorship ratio l_y/l_x according to a service table, of changing one of the sets of decremental rates in the same proportion at all ages, or of removing a set altogether, or of introducing a new set in addition to those already present. For example, given a service table based on certain rates of mortality and withdrawal, we shall be able to estimate, with a negligible amount of arithmetical work, the new values of such ratios as l₆₀/l₂₅ resulting from removing the mortality rates altogether, from doubling or halving the withdrawal rates or from introducing a new set of decremental rates.