Actuarial Services

[Guest 401der]

In general: What services would an outside actuary normally provide to a pension plan being recordkept/administered by the retirement arm of a mutual fund company where there is no internal actuarial service offered. What services would a current actuary for a plan expect to provide to a plan that transfers its administration to an administrator that offers limited actuarial services and allows a pension plan to use its own actuary? In very general terms, other than contribution calculations, funding projections, Schedule B, and PBCG reporting, what services of a strictly actuarial nature need to be performed? Should an EA review and approve every distribution?

[SoCalActuary]

This gets to the question of professional responsibility.

If the actuary is subject to protection under the TPA's insurance as if an employee, then the TPA can administer as much of the plan as possible, using the actuary for the strictly actuarial services. These include the valuation, schedule b, pbgc premium.

Under that scenario, the TPA decides if they have competent staff to perform distribution calculations, and if not, have the actuary do the work.

On the other hand, if the actuary is solely responsible for their work, then the actuary should supervise the administration of employee records, communicate directly with the client and their advisors, review the distributions, and all other aspects of the administration except the investments.

[Blinky the 3-eyed Fish]

There are actuaries out there that sign Sch B's and PBGC forms, when needed, for $100 or so. All other plan administrative functions are performed by non-actuaries. As you can guess, the $100 doesn't buy a high level of review, so it's these situations where serious problems can arise unless there is competent staff performing the actuarial services. This would classify as the bare minimum of actuary involvement.

[Effen]

This would classify as the bare minimum of actuary involvement.

and most likely an "actuary" that isn't in compliance with the actuarial standards.

[david rigby]

I don't disagree with prior responses, but I'm not sure they answer the original question.

In the case presented, the services "provided" are as defined by the plan sponsor. Bare bones, the EA services necessary are the Schedule B and the PBGC form, but beyond that is up to the discretion of the sponsor (or possibly the plan administrator or trustee). How such services are provided and safeguarded (peer review, etc.) is up to the parties involved, including the actuary and whoever is engaging the actuary.

However, if I were engaged on a contract basis, I would want more involvement than merely signing the forms, no matter how much review is permitted and/or encouraged. Such involvement might include some direct communciation with the plan sponsor so that entity understands who is filling what role. This goes directly to Precept 8.

[SoCalActuary]

This question also gets to the issue of indemnification against claims.

Who is responsible for defending the work? If the Fund family is providing the services and subcontracts for actuarial services, then the fund family is jointly responsible for the quality of the workproduct. If the actuary takes sole responsiblity for the actuarial services, then the fund family has a legitimate defense against the actuary's potential errors. However, the actuary then has a higher duty to insist on oversight of the work.