SECTION 11. BASE TABLE

CONSTRUCTION – GENERAL METHOD

.01 In General . Except as otherwise provided in section 12 of this revenue procedure, a Base Table for a population must be created from the Unadjusted Base Table for the population through the application of a graduation method generally used by the actuarial profession in the United States ( e.g., Whittaker-Henderson Type B, Karup-King). Section 12 of this revenue procedure provides for an alternate method of constructing a Base Table through the application of a fixed percentage to the mortality rates of a Standard Mortality Table, projected to the Base Year.

.02 Information Regarding Graduation Methods . The graduation method must be identified and the parameters of the graduation method used must be specified ( e.g., for Whittaker-Henderson Type B, the number of differences and the “h” value must be specified). If more than one graduation is performed, then the parameters must be specified for each such graduation.

.03 Intermediate Values . If more than one graduation is performed in the process of adjusting an Unadjusted Base Table to a

However, if the overall Experience Study Period is less than 4 years in length, or if the population or plan for which lack of credibility experience is being demonstrated is not in the Permissive Group, then the general rule of subsection .01 of this section is applied based on the number of years of data used for each plan in the Permissive Group. For example, if the periods used to analyze experience data for Plans A and B were only 2 years in length, the Lack of Credible Mortality Experience Demonstration Period for any plans or populations within the Permissive Group could either be a period of 4 years (with both plans using the same period of time to analyze experience data) or 4 years and 2 months (using 4-year periods corresponding to the plan year for each plan to analyze the experience data). In either case, the Lack of Credible Mortality Experience Demonstration Period must end less than 3 years before the first day of any plan year for which lack of credible mortality experience is being demonstrated.

.07 Alternative Demonstrations of Lack of Credible Mortality Experience . In lieu of the information described in subsections .04 through .06 of this section, lack of credible mortality experience may be demonstrated by providing alternative information if such information demonstrates to the satisfaction of the Commissioner that the number of male and/or female deaths would not exceed 1,000 during the Lack of Credible Mortality Experience Demonstration Period. For example, a year-byyear reconciliation of the participant population (such as might be shown in an actuarial valuation report) could be submitted showing that the total number of participants leaving the plan during the Lack of Credible Mortality Experience Demonstration Period is less than 1,000, as this would clearly show that the number of male and female deaths must also be less than 1,000 during that period. Similarly, if the total number of participants in the plan does not exceed 1,000 for any year during the Lack of Credible Mortality Experience Demonstration Period, the yearby-year number of participants in the plan during such period could be submitted in lieu of the information described in subsections .04 through .06 of this section, as this would indicate that it would be highly unlikely that the total number of deaths during that period would exceed 1,000.