This is referring to 2015 AM Q1C.
I got it right that the weighted average duration goes down now that 10% of the workforce accepted the lumpsum exit from the plan payable in a years time. But I have a question extending from it.
If this was a one time option payable at that instant, do the plan liabilities durations go back to what they were after the sums are paid? I’d say they will go up after the shorter (over 50 years who exited) liabilities are removed
I think that would be a horrible question on the exam ^^. We probably would have to know the ratio of active to inactive participants or more directly, the duration ex the liabilities related to those who are taking the option.
If we say that before the option is exercised : DUREX : the duration of the liabilities ex those related to people who will take the option and DUROPT : the liabilities related to the people who will take the option, I think there are two situations :
PS: yes there is a condom joke somewhere