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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Taro who wrote (516181)	9/25/2009 4:53:04 PM
From: i-node	Read Replies (1) \| Respond to of 1579770

By the way, any idea of the long term interest rate being the base for this present value calculation? I think it changes over time but the long-term ones around 6%. What's interesting is that the actuarial associating has expressed its concern over the reliability of the longer-term projections for some time. So, what they ended up doing was to apply a stochastic model to the problem. What ends up happening is the floor (i.e., best case scenario) ends up being about what the original numbers were, then, other probable scenarios end up being vastly more expensive. So, when they refined the process using probabilistic models, it only looks worse. Where the prior numbers suggested something like a 14-15% payroll tax (versus the current 12.4%) might do, the stochastic models run all the way up past 20%. Not exactly encouraging. The discounting doesn't take into account mistakes in the assumptions, for sure. But pretty much all the mistakes a person can envision make the problem WORSE, not better. In particular, the actuaries admit that most are concerned about the UNDER-estimation of what expected lifespans might be 50 years from now. And that's a real problem that actuaries don't (and can't take into account) -- the rate of growth in medical technologies is exponential at this point for even short periods of time. It is highly likely that over 50 years or certainly 75, there are going to be developments which can keep people alive way beyond what is now anticipated. THEN what do you do?