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RV-85 and RV-98 tables for males, to the RV-85 table for females. As a result, the rate of mortality improvement is essentially the same for both sexes.

Finally, the third table, referred to as RV-04, is a period table based on Chilean annuitant mortality data collected between 1995 and 2003. The RV-04 is more representative of the Chilean annuitant population than its two predecessors and has recently been adopted for all regulatory purposes. Among several of its positive features, both male and female tables were developed separately, and the representative version of the table passed all the standard consistency tests comfortably.<sup>5</sup> However, these recently constructed tables still have some shortcomings that need to be considered. Because there are fewer annuitants at older ages, data was included from the previous scheme. This implies that the mortality rates at older ages may not be as representative of annuitants as the earlier ages, and rather reflect the mortality of retirees under the old system. Rates were updated to 2004 using the national statistical agency’s assumed age-specific improvement rates for the population. The RV-04 table was selected for the computation of MWRs because it is the most representative of the current annuity population. The table was adjusted to the relevant year of issue of each annuity using the same approach adopted in the official table and the same rates.

As shown in Table 2, there are significant differences in the shape of the three mortality tables. Mortality rates in the RV-98 and RV-04 are systematically and substantially lower than those in the RV-85. Male mortality rates in the RV-04 are lower than those in RV98 for intermediate ages, but higher at some younger and older ages. Female mortality rates, however, are substantially lower in the RV-04. As noted above, the earlier (RV-85 and RV-98) tables for females are constructed more subjectively than the RV-04 tables for both sexes and the RV-98 table for males. Whilst the shape and level of the mortality tables is still a matter for some debate in Chile, the RV-04 table seems to be the most scientific and robust for both sexes.

Each of these three tables is published as a period table, requiring adjustments in order to convert them into cohort tables. Cohort results were initially developed using two alternatives, namely, national population projection rates, and the rates of improvement between the RV-85 and the RV-04 tables. The first method was ultimately judged as superior and has been adopted here. The basic reason was the high degree of arbitrariness involved in the construction of the RV-85 table. In particular, it is clear that the female improvement rates derived from these tables continue to be open to greater uncertainty and are well above the observed and assumed population estimates.

> 5A standard battery of statistical tests is set out in Benjamin and Pollard (2001) and has been applied to the RV-04 tables separately for male and female tables. In the case of each test, the representative table used in these calculations is found to pass the test – that is, the table reflects the underlying mortality experience.