Document ID: chunk:federal_register_of_legislation:F2023L00208:front:0:p9
Version: federal_register_of_legislation:F2023L00208
Segment Type: other
Provision Reference: 
Character Range: 22450–27508

(b)          the rate of interest in determining the termination value is 4.50% p.a.;

       (c)          the rate of mortality is the 'A1924-29 Table'; and

       (d)          the allowance for cost of services is implicit through the use of a Sprague adjustment in the determination of the net premium, and a further adjustment factor. These adjustments are part of the prescribed methodology (see Attachment 2).

    5.             A reference to mortality in accordance with the 'A1924-29 Table' is a reference to the ultimate table of mortality included in the tables published for the Institute and Faculty of Actuaries under that short title.
Part IV – alternative basis for traditional business and long term risk business issued after the date of commencement

                               Interest rate                       Initial expense allowance
                               (refer note 1)                      (refer note 4)

Regular premium                PRE                                 POST                         PRE                          POST

Ordinary                       61% of gross rate                   70% of                       1.5 year Sprague adjustment  1.5 year Sprague adjustment
                                                                   gross rate
                                                                                                Factor = 88%                 Factor = 88%

Superannuation participating   85% of (gross rate less 1%)         85% of                       2 year Sprague adjustment    2 year Sprague adjustment
                                                                   (gross rate less 1%)
                                                                                                Factor = 85%                 Factor = 85%

Superannuation                 85% of gross rate                   85% of                       2 year Sprague adjustment    1.5 year Sprague adjustment
non-participating                                                  gross rate
                                                                                                Factor = 85%                 Factor = 88%

                               Where gross rate is 9.25%

Single premium                 PRE                                 POST                         PRE                          POST

Ordinary                       61% of                              70% of                       Factor = 94%                 Factor = 94%
                               gross rate                          gross rate

Superannuation                 85% of (gross rate less 1%)         85% of (gross rate less 1%)  Factor = 92.5%               Factor = 92.5%
participating

Superannuation                 85% of                              85% of                       Factor = 92.5%               Factor = 94%
non-participating              gross rate                          gross rate

Tax exempt                     100% of gross rate                  100% of gross rate           Factor = 91%                 Factor = 94%

                               Where gross rate is (CB Rate + 3%)

Notes:

    1. The interest rates shown are applicable to non-participating business, unless otherwise specified. The applicable interest rates for participating business are determined as for non-participating business, but using gross rate less 1.0%.

    2. In all cases the mortality assumption is the IA 90-92 mortality table published for the Institute of Actuaries of Australia. Where a product distinguishes gender and smoker status, the life company may appropriately reflect this in using the mortality table.

    3. A reference to CB Rate is a reference to the yield on 10 year Commonwealth Government Bonds at date of calculation.

    4. Sprague adjustment and Factor refer to the respective items described in the formulae in Attachment 2 - Part II.

Part V – immediate annuities and fixed term/rate business

                                                                                                                                                                                      PRE              POST
                                                                                                                                                                                        interest rate  interest rate

Immediate annuities and fixed term/rate business                                                                                                              Ordinary:              61% gross rate    70% gross rate

                                                                                                                                                              Superannuation:   85% gross rate         85% gross rate

                                                                                                                                                              Tax exempt:         100% gross