The Actuarial Standards Board (ASB) has issued a request for comments regarding the standards governing actuarial work for public pension plans.   Currently there are no standards specific to public pension plans, and guidance is provided by those standards of practice applicable to defined pension plans generally.

In its request for comments, the ASB noted the increased scrutiny of public pensions in recent years and several papers released by major actuarial organizations and others related to public pension plan funding.  As a result the ASB plans a "comprehensive review" of actuarial standards regarding their application to public plans.

The ASB requested comments on these topics:

  1. Public plan funding and associated actuarial valuations are less uniformly regulated than those of private sector pension plans. Actuaries may be asked by their principal to advise on funding levels. Is additional guidance needed, beyond that in the recently revised pension ASOPs, regarding appropriate public plan actuarial valuation practice to assist actuaries in performing their work and advising their principal? Why or why not? 
  2. If yes to question 1, in what areas is additional guidance needed?
  3. If yes to question 1, should that guidance take the form of a separate public plan actuarial valuation standard or be incorporated within the existing ASOPs? Why or why not?
  4. In general, the ASOPs are principles based and not rules based. As a result, the ASOPs are generally not highly prescriptive. Should the ASOPs related to public plan actuarial valuations be more prescriptive? If so, in what areas?
  5. The ASOPs have provided guidance that has been applicable to all areas of practice in the pension community (for example, private sector, multiemployer, public sector). If you believe that additional guidance is needed for public plan actuarial valuations, should any of that additional guidance also apply to non-public sector plans? Why or why not?
  6. The current definition of an "intended user" of an actuarial communication is "any person who the actuary identifies as able to rely on the actuarial findings" (ASOP No. 41, Actuarial Communications, section 2.7). Should the ASOPs require the actuary for public pension plans to perform additional, significant work (which would be incorporated in the guidance provided in the ASOPs) that is not requested by the principal if that work provides useful information to individuals who are not intended users? Why or why not? If so, should this requirement be extended to all pension practice areas? Why or why not?

Any interested person may comment. Instructions for submitting comments are included in the Request for Comments document. Comments are due by November 15, 2014.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.