Demographic Assumptions

Hewitt Associates, in order to perform valuations on pension plans, must make certain demographic assumptions. The objective of this project was to choose statistical tests to analyze the accuracy of these assumptions, and to provide the sponsor with an automated tool to use on an ongoing basis. This MQP created a tool within Microsoft Excel that works with Hewitt\u27s current pension valuation software to analyze the statistical accuracy of Hewitt\u27s demographic assumptions. The analysis compares how well Hewitt\u27s expected demographic probabilities performed using exact confidence intervals and the calculation of p-values adjusted for False Discovery Rate. This tool flags assumptions that need to be reassessed and will aid Hewitt in improving the accuracy of their demographic assumption