erroneous actuarial computations

[Larry M]

"Erroneous actuarial computations" and "actuarial error" are two phrases which annoy me.

The first appears in the 1956 Treaury Reg. 1.401-2(b)(1), as the basis for the exception allowing an employer to recover surplus assets.

The second phrase appears in other literature as a synonym for the first.

The phrase is intended to recognize actuarial assumptions and methods are intended to approximate reality and rarely will duplicate the expereince of a plan.

Actuarial assumptions are used to estimate the costs in advance and we expect and hope the projections will come close to the truth. Reasonable actuarial assumptions, no matter how well developed and used will rarely, if ever, develop a fund which exactly meets the liabilities upon termination of a plan.

There is no "error" involved.

If I were to call something an "accounting error" or a "legal error", it would be a slap in the face of the accountant or attorney....and I might be subjecct to a law suit.

Yet, we actuaries allow the world to use the perjorative phrase.

So, I ask your help to develop a phrase which will replace the offensive ones.

To start the ball rolling, we have

actuarial deviance

experience adjustment

experience deviation

experience disparity

or

as a result of Al Qaeda..

[Guest Texas_Acty]

I'd prefer "actuarial error" over "actuarial deviance" any day.

[rcline46]

Anything with 'deviance' is too close to 'deviants', so I concur.

Since we use statistical models (that is what a mortality table is) then we have rights to statistical terms other than 'deviance'.

Actuarial model variations sounds good.

[SoCalActuary]

I prefer these variations:

"Unexpected results"

"Event-driven results"

"Changes after review of facts"

[david rigby]

I tend to use "experience", especially in the context of "experience gain/loss".

I never use "actuarial gain/loss".

[AndyH]

thesaurus.com can often be useful in these discussions.

Instead of "deviance", actuarial "aberancy" or "weirdness" make the beginning and end of the suggestion list.

Looking at "error" instead, it suggests "boo boo" as an alternative. That's it, "actuarial boo boo"

[Ron Snyder]

How about "actuarial screw up"? Or "actuarial oops"? "Bad actuarial estimate?" "Actuarial inaccuracy?"

In mathematics "error" is defined as "The difference between a computed, estimated, or measured value and the true, specified, or theoretically correct value." The term "actuarial error" is correct.

[Larry M]

Vebaguru: Although a statistical error is defined as you state, the normal connotation of "error", especially when combined with "actuarial" still leaves a bad taste in my mouth.

Even if one could argue that "actuarial error" is an appropriate term for statisticians to use, we still have the Tres Reg saying ""erroneous actuarial computation".

This, I believe is beyond the statistical definition.

My concern is the public considers the term "actuarial error" and "erroneous actuarial computation" as meaning the actuary has made a mistake in his or her calculations.

Further, I would hate to be involved in a malpractice suit where the attorneys are trying to defend "actuarial errors" and "erroneous actuarial calculations".

Therefore, I am trying to get help in developing substitute phrases which do not stick in the craw.

[Aside to Texas_Acty: I am surprised a Texan would be upset with "deviance". Heck, I thought Texans were proud of their individuality.]

As with pax, I prefer something which more clearly defines the situation as having excess assets because experience differed from expectations.

Now, how do we get the people at Treasury to drop all their other assignments and spend time rewriting Reg. 1.401-2(b)(1)?

As long as we are dreaming, how can we get Congress to recind all the obnoxious amendments to ERISA? ...but that's the theme of another thread.

[rcline46]

Actuarial variance does not sound that bad.

[Locust]

No disrespect to you actuaries, but who cares? The only ones who ever use the term are pension specialists, and they know what it means.

But "actuarial variance" has a nice harmless sounding ring to it. Nothing to get excited about, tres snoozy!

What about another name for actuaries? Lawyers have all sorts of pejorative and other names that make them sound sordid and dangerous - sharks, ambulance chasers, legal eagles, crooks etc. But actuaries - I can't think of any colorful names?

I propose "Numbers Drudges." Or how about "Numerical Manipulators"?

Actuaries - this is your chance to add a little color to the profession!

[SoCalActuary]

Pension Actuaries are:

The real pension authorities

The ones who actually understand the numbers

The ones who have read the rules and understood them

People who understand the difference between today's funds and tomorrow's promise.

[Locust]

How about the "Masters of Numerical Deviation" or "Pension Wiseguys" or "The guys who've got your numbers"?

[Guest Texas_Acty]

[Aside to Texas_Acty: I am surprised a Texan would be upset with "deviance". Heck, I thought Texans were proud of their individuality.]

Actually, I'm a transplanted Mid-Atlanticer. And call me dense, but I don't get your point in [].

As Locust above says, Who cares? Practitioners know that "actuarial error" means actual-minus-expected. The term has been in the guidance and standard usage long enough that it clearly means just what it is: deviation from assumed. Moreover, in a bench trial there is little liklihood that any judge is going to prove dumb enough that a plaintiffs atty convinces him to decide, Why, there's been actuarial error... That actuary committed actuarial error. Duh....

[Kirk Maldonado]

Actuarial perversion?

[david rigby]

Hey Kirk! That hurts, coming from a lawyer.

[Guest Pensions in Paradise]

Reality Adjustment