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Text of Letter from American Academy of Actuaries to Actuarial Standards Board on Coordinating ASOPs Involving Retirement Benefits (PDF)

"To effectively coordinate the two standards, we recommend the [Actuarial Standards Board (ASB)] look at the retirement benefit standards holistically, with detailed attention from both pension and [retiree group benefit (RGB)] specialists in drafting the concepts and language. The differences between the pension practice and the RGB practice (primarily retiree health benefits) need to be examined, with an understanding that below-standard work in any practice is a disservice to the public and our profession. Given the differences in pension and RGB practice, the ASB should review the process that placed the ASB Pension Committee in the position of editing an RGB ASOP."

Comment Letter from Pension Finance Task Force of the American Academy of Actuaries to Actuarial Standards Board, on Proposed Revisions to ASOP No. 4, 'Measuring Pension Obligations and Determining Pension Plan Costs or Contributions' (PDF)

"[The Pension Finance Task Force applauds] the inclusion of a definition for 'market consistent present value' in the exposure draft and [believes] that the Actuarial Standards Board has defined it well. The definition addresses the essence of market consistency while also recognizing that no single approach is best in all situations. Many factors affect the determination of market-consistent values in any specific case, and it would not have been possible to anticipate all possibilities in a more prescriptive definition. The proposed principle-based definition can remain relevant even as the pension plan environment evolves. Market-consistent values are of critical importance."

American Academy of Actuaries Comment Letter to Actuarial Standards Board on ASOP No. 4 Revisions (PDF)

The Academy's Pension Committee submitted a comment letter to the Actuarial Standards Board regarding the discussion draft of proposed revisions to ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions.

American Academy of Actuaries Comment Letter to Actuarial Standards Board on Proposed Revisions to Actuarial Standard of Practice (ASOP) No. 27, Selection of Economic Assumptions for Measuring Pension Obligations (PDF)

"There are numerous instances in which the exclusive use of the word 'pension' makes the application of the standard to retiree group benefit practice tenuous. We encourage the ASB to clarify in this ASOP that mastery of pension practice is not the same as mastery of retiree group benefit practice (or vice versa).... In addition, Section 1.1.c. indicates that the purpose of the standard is to enhance those provisions of ASOP No. 6 that relate to the selection and use of economic assumptions.... There are a number of economic assumptions important to retiree health benefit measurement (most obviously, health care cost trend) that are not mentioned in ASOP No. 27."

American Academy of Actuaries Comment Letter to Actuarial Standards Board on Second Exposure Drafts of ASOP Nos. 27 and 35 (PDF)

"We believe much good work has been done to improve the clarity of the proposed [Actuarial Standard of Practice No. 27, Selection of Economic Assumptions for Measuring Pension Obligations, and Actuarial Standard of Practice No. 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations]. Nevertheless, we have some comments on the current exposure drafts."

American Academy of Actuaries Comment Letter to Actuarial Standards Board on ASOPs Pertaining to Public Pension Plan Funding (PDF)

"[A]dditional guidance or disclosure requirements could provide support to actuaries who make appropriate comments or disclosures when the plan or plan sponsor actions may not be consistent with the actuaries' recommendations.... With the new GASB standards, the determination of an appropriate actuarially determined contribution has become of greater importance for public plans and some additional guidance could be helpful ... [To] maintain the consistency of standards applicable to all pension actuaries, any new guidance should not be limited to a sub category based solely on the nature of the plan sponsor."

Pension Committee of the American Academy of Actuaries Comment Letter to Actuarial Standards Board on Proposed Revision of ASOP No. 35 (PDF)

"The language [of Sections 2.6 and 2.7] regarding a Prescribed Method may be confusing to some actuaries.... Section 3.1 ... should state that an actuary is very often able to identify two or more reasonable assumptions... It is not clear why the language [of Section 3.5.1 and 3.5.2] was changed from 'the actuary should establish an appropriate balance between refined methodology and materiality' to 'the actuary should consider the balance between refined assumptions and materiality'... Section 4.4 ... should include a statement that the Principal is the party that determines what is confidential or what the actuary may disclose[.]"

American Academy of Actuaries Comment Letter to Actuarial Standards Board on its Discussion Draft, 'Assessment and Disclosure of Risk Associated with Pension Obligations, Plan Costs, and Plan Contributions' (PDF)

"[T]here is substantial uncertainty involved in most retirement plan calculations due to the broad array of assumptions that are made, almost none of which are certain to be borne out. Taking at least some steps to ensure that the users of an actuarial work product are aware of the uncertainty involved is certainly advisable. The key decision, however, is how much additional work can be required of actuaries in performing substantially all actuarial assignments."

American Academy of Actuaries Pension Committee Comment Letter to Actuarial Standards Board on the Exposure Draft of the Proposed ASOP on Modeling (PDF)

"The exposure draft defines 'model' broadly. Indeed, the last paragraph in the background section says: 'Actuaries generally agree that almost all actuarial work involves modeling of some type....' It is unclear why this ASOP is needed in situations involving straightforward calculations. For instance, in calculating a deterministic present value using a pension valuation system or even using pencil and paper, the actuary seems to be using a model, as defined. In situations such as these, the exposure draft does not seem to have any positive effect and might instead add cost and exposure to routine work. Therefore, we believe the definition of 'model' should be scaled back so that the ASOP only applies where it provides value."

American Academy of Actuaries Comment Letter to Actuarial Standards Board on Proposed ASOP: Assessment and Disclosure of Risk (PDF)

"[We] believe it is appropriate to raise the minimum requirements to include assessments and disclosures of risks related to the funding of pension plan ... [T]he proposed standard specifically does not require the actuary to evaluate the ability of the plan sponsor to make contributions when due. As actuaries, we do not have the necessary expertise to make such an evaluation, so we fully support the current position of the standard. Yet, we must also recognize that the health of the pension plan cannot be completely separated from the health of the plan sponsor and the health of the plan sponsor is a key risk to the plan."