Impact Technical Provision Males 3% interest rate OAP (65) Deferred SP SP in payment* Total 1% interest rate OAP (65) Deferred SP SP in payment* Total Young Average Old Females Young Average Old -2.4% -2.2% -2.1% -2.2% -1.9% -1.6% 1.1% 0.7% 0.1% 1.9% 0.8% -0.3% -1.2% -1.1% -1.4% -1.0% -1.3% -1.7% -1.7% -1.6% -1.6% -1.8% -1.7% -1.6% Young Average Old Young Average Old -3.0% -2.8% -2.5% -2.7% -2.4% -2.0% 0.4% 0.0% -0.4% 1.0% 0.0% -1.0% -1.6% -1.5% -1.7% -1.5% -1.8% -2.1% -2.2% -2.1% -2.0% -2.4% -2.2% -2.0% Table 7.7 Impact on model portfolio provisions of a transition from AG2018 to AG2020 (difference AG2020 minus AG2018 expressed as percentage of AG2018). The separate percentages as listed for OAP and SP do not add up to the percentages in the total lines. This is caused by the difference in the provisions for the separate benefits. * The impact on the provisions of survivor’s pensions in payment refer to the gender of the surviving partner. Table 7.7 indicates that the differences between model funds, in terms of provision, are limited. For an average portfolio the provision will be reduced by about 2% at 1% interest. For women the impact is higher (average reduction of 1.2 and 1.6% respectively). Compared to the effects at 3% interest rate, the lower interest rate exacerbates the impact at 1% interest. Table 7.8 lists the impact of AG2018 to AG2020 on pension scheme contributions for the model portfolios. Impact Contributions 3% interest rate OAP (68) 1% interest rate OAP (68) Males -2.9% OAP + 70% deferred SP accrual -1.9% OAP + 70% deferred SP risk -2.4% Males -3.5% OAP + 70% deferred SP accrual -2.4% OAP + 70% deferred SP risk -3.1% Females -2.5% -2.0% -2.3% Females -3.0% -2.6% -2.9% Table 7.8 Impact on model portfolio contributions of a transition from AG2018 to AG2020 (difference AG2020 minus AG2018 expressed as percentage of AG2018) The impact on contributions exceeds the impact on provisions due to the longer average projection horizon and shows a decrease of 2.5 to 3 per cent at 1% interest rate. In table 7.9 the impact on provisions of AG2018 to AG2020 for an average model portfolio is split into 2 steps. Projections Life Table AG2020 Results 32
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