Actuarial Standards Board News

The ASB has introduced a new process for the submission of comments commencing with the upcoming release of the exposure drafts of Actuarial Standard of Practice (ASOP) No. 22, Statements of Actuarial Opinion Based on Asset Adequacy Analysis for Life, Annuity, or Health Reserves and Other Liabilities, and ASOP No. 28, Statements of Actuarial Opinion Regarding Health Insurance Assets and Liabilities. Comments should be submitted via the comment template, which can be accessed here.  The transmittal letter of these and future exposure drafts will also include a link to the template. The template will streamline the process for drafting committees to review and respond to comments. The template also is designed to encourage commentators to include both suggested edits and the rationale for such suggested edits. While general comments are always welcome, suggestions for alternative wording and the rationale for the suggested wording helps the ASB better understand the commentator’s concern about the guidance in an exposure draft. 

The ASB has discussed the Oct. 1, 2020 effective for ASOP No. 56, Modeling. In light of the importance of this standard, the Board believes that there is sufficient lead time between now and the effective date of the ASOP and that an extension of the effective date is not now in the best interest of the profession or the public. Should circumstances warrant, the Board is free under its Rules of Procedure to reconsider that conclusion, but sees no need at this time to alter the effective date. The Pension Practice Council’s letter can be viewed here.

The ASB has extended the comment deadline for the exposure draft of ASOP No. 11, Reinsurance Involving Life Insurance, Annuities, or Health Benefit Plans in Financial Reports, and the second exposure draft of ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. The extension of the comment deadlines is due to the current COVID-19 pandemic and its worldwide impact on normal business operations, which may have impeded individuals or organizations from submitting comments. The ASB received requests to extend the deadlines from a task force of the American Academy of Actuaries’ Life Practice Council via email and from the Pension Practice Council and several of its committee chairpersons via letter. The Pension Practice Council’s letter can be viewed here.

The new comment deadline for ASOP No. 11 is June 30 and for ASOP No. 4 is July 31. Both exposure drafts can be viewed here.

The ASB released its 2019 Annual Report. In 2019, the ASB had another banner year in standards-setting, adopting two new ASOPs, approving eight exposure drafts for comment, approving a proposal to revise one existing ASOP, and issuing one Request for Input on an ASOP on rate filings. In addition, the ASB presented a professionalism series webinar on reliance in ASOPs and provided content for several Actuarial Update “Professionalism Counts” articles.

The ASB approved a second exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions.

The ASOP provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a defined benefit pension plan also referred to as “plan” or “pension plan” throughout this standard and determining periodic costs or actuarially determined contributions for such plans. Notable changes since the first exposure draft include expanding the ASOP’s scope to clarify the guidance when an assumption or method is not selected by the actuary; renaming the Investment Risk Defeasement Measure section to Low-Default-Risk Obligation Measure and substantially modifying its guidance for calculating such a measure; and modifying the Output Smoothing Method section to clarify how to determine whether a reasonable relationship exists with the actuarially determined contribution without regard to the output smoothing method.

The comment deadline for the second exposure draft, which can be viewed here, is April 30, 2020.