Chapter20-Setting assumptions

Question 1

Framework

Answer 1

1 Important considerations when setting assumptions (LUNCH)
2 Using historical data for setting economic assumptions
3 Using current data and forecasts for setting assumptions
4 Possibility of past data being irrelevant to the future
5 Changes in social, economic and fiscal conditions affecting assumptions
6 Changes in the balance of homogenous groups affecting assumptions
7 Considerations in using data from standard mortality tables
8 Accuracy and prudence when setting assumptions
9 An implicit assumption in a pension scheme
10 Ways to build in margins for risk
11 Profit criteria
12 Contract design features that increase the risks