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Actuaries Held to Higher Standards– Even More Important When Retirement Plans at Risk

Melinda | August 31, 2011 | 0 Comments

ASPPA News from the Field
2011 Actuarial Symposium

Boston, MA., (August 12, 2011) – The ASPPA College of Pension Actuaries (ACOPA) sponsored the Actuarial Symposium in Boston on August 12th and 13th. The symposium is attended by actuaries, retirement plan professionals, and IRS representatives in a town hall forum, where learning is driven by interactive dialogue facilitated by leaders in the profession.

The media frenzy surrounding tax “deductions” (more appropriately referred to as deferrals) afforded by qualified plans has been increasing over the past few years, but even more so with the recent budget deficit debates on Capitol Hill (see Miller Discusses Retirement Plans’ Impact on Reducing the Federal Budget Deficit). With many contributors to the discussion, it is apparent that the actuarial community must position itself as a leader in sculpting the future landscape of retirement. New standards and regulations for the actuarial community, holding our profession to a higher standard, re-assert our skill set and ability to do so.

Led by Michael B. Preston, President and Chief Actuary of Preston Actuarial Service, Inc, the new standards and regulations for actuarial professionals were one of the significant presentations. According to Mr. Preston, in addition to The Code of Professional Conduct for Actuaries, the American Academy of Actuaries Qualification Standards, and IRS Circular 230, actuaries must also abide by the revised Actuarial Standard of Practice (“ASOP”) No. 41 and the new Joint Board for the Enrollment of Actuaries Regulations.

The revised ASOP No. 41, effective May 1, 2011, provides a new framework for actuarial communications. Mr. Preston quoted the definition of an actuarial communication from the standard itself “as a written, electronic or oral communication issued by an actuary with respect to actuarial services.” This includes, but is not limited to conversations, emails, letters, certifications and reports to Plan Sponsors and/or Plan Administrators from an actuary. Even work supervised by an actuary (completed by a non-actuary) must follow the standard. All such actuarial communications must be accompanied by disclosures of the assumptions used in the actuarial communication. Best practices were discussed amongst symposium participants and a disclosure and/or summary covering all actuarial communications during the year as part of the actuarial valuation report would satisfy such requirements.

The new Joint Board for the Enrollment of Actuaries Regulations, effective May 2, 2011, strengthened continuing education, asserted ASOP adherence for all enrolled actuaries (even those who are not members of any actuarial organization), provided new conflict of interest provisions, and provided guidelines for dealings with the Internal Revenue Service, Department of Labor, or the Pension Benefit Guaranty Corporation. Per Mr. Preston, all actuaries need to review these new regulations to ensure compliance.

As we believe the retirement industry will continue to be under the magnifying glass in Washington D.C., it is up to the actuarial profession to maintain its high standards. By abiding by these new standards, “main street” may have a professional organization looking out for their best interest, and, more importantly, someone they can trust.

—Craig Blumenfeld, FSA, EA,MSPA
Consulting Actuary, Alliance Pension Consultants, Deerfield Illinois
ACOPA Member since 2008