The ASB recently approved a second exposure draft of a proposed new ASOP titled Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions. Key changes to the second exposure draft include expanding the scope of the proposed ASOP from applying only to actuaries when performing a funding valuation of a pension plan to applying also to actuaries when performing a pricing valuation of a proposed pension plan change that would, in the actuary’s professional judgment, significantly change the types or levels of risks of the pension plan. In addition to other modifications, the scope also was modified to exclude actuarial services performed in connection with applications for benefit suspensions under the Multiemployer Pension Relief Act of 2014.
The ASB also approved a third exposure draft of a proposed new ASOP titled Modeling. Among the several modifications to the draft, key changes include narrowing the scope but, within that scope, making the guidance less subject to professional judgment as to its applicability; clarifying the definitions for “model,” “data,” and “model run”; and clarifying guidance with respect to using models designed or built by others.
The comment deadline for both exposure drafts, which can be viewed here, is Oct. 31, 2016. Information on how to submit comments can be found in the drafts.
The ASB has released the report of its Pension Task Force (PTF), which began work more than a year and a half ago to consider the standards implications of many proposals for change related to public pension plans. In December 2014, the PTF was formed to review input from interested stakeholders on actuarial standards of practice (ASOPs) regarding public pension plans, for the purpose of developing suggestions for the ASB’s consideration. This input included the responses to the ASB’s request for comments on ASOPs and Public Pension Plan Funding and Accounting, and testimony provided at the ASB’s July 2015 hearing on public pension plans. After extensive discussion of the PTF’s suggestions, the ASB has directed its Pension Committee to draft appropriate proposed modifications, in accordance with ASB procedures. The proposed modifications would be applicable to both public and private-sector plans, and are part of a greater, ongoing effort by the ASB in recent years to strengthen pension-related ASOPs. The ASB expresses its appreciation of the PTF’s dedicated work on this project.
The ASB recently approved an exposure draft of a revision to ASOP No. 5, Incurred Health and Disability Claims, and a second exposure draft of proposed ASOP Property/Casualty Ratemaking.
The proposed revision to ASOP No. 5 reflects a number of changes to other standards that have been made since the 2000 revision, and includes key changes such as explicitly addressing certain considerations in estimating and analyzing incurred claims, including behavior of claimants, claim seasonality, credibility, payments and recoveries under government programs, and the purpose and intended use of the unpaid claim estimate.
The proposed new ASOP Property/Casualty Ratemaking addresses items in the Considerations section of the Statement of Principles Regarding Property/Casualty Ratemaking, as well as ratemaking items not currently addressed in existing ASOPs. Changes made in response to comments received on the September 2014 first exposure draft include revisions to the scope of the ASOP to clarify the practice areas for which it is applicable and the actuarial activities to which it is applicable; and provides guidance regarding the estimating of future costs in total as well as by underlying levels that comprise the estimate of future cost.
The comment deadline for both exposure drafts is April 30, 2016 and can be viewed under the “Drafts” tab in “Current Exposure Drafts.”
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About The ASB
The Actuarial Standards Board (ASB) sets standards for appropriate actuarial practice in the United States through the development and promulgation of Actuarial Standards of Practice (ASOPs). These ASOPs describe the procedures an actuary should follow when performing actuarial services and identify what the actuary should disclose when communicating the results of those services.