Download ppt - 2008 General Meeting Assemblée générale 2008 Toronto, Ontario

2008 General MeetingAssemblée générale 2008

Toronto, Ontario

2008 General MeetingAssemblée générale 2008

Toronto, Ontario

Canadian Institute

of Actuaries

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

L’Institut canadien desactuaires

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• Notice of Intent• Issued: September 3, 2008• Comment deadline: November 14, 2008• Covers:

• SOP Section 3000

• Except Commuted Values

• Draft Standards are appended• Generally consistent with PPFRC Working

Document of March 2007

Actuarial Standards Board – Pension Specific Standards

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• Role of Actuarial Standards re: Funding• Determination of minimum/maximum

contributions per legal requirements• Advice regarding alternative funding levels

per terms of engagement• Required disclosures regarding funded status

and associated risks

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• Enhanced Disclosures (External User Report)• Required in all reports, unless wind-up benefit are not

defined or a designated plan covering only “connected” persons

• Hypothetical wind-up funded status under a maximum cost scenario (currently required)

• Hypothetical wind-up or solvency valuation simplified gain/loss

• Hypothetical wind-up or solvency service cost

• Risk analysis

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• Going Concern Valuations• May be required by terms of engagement or by law (as

currently required for registered plans) but not by SOP

• Assumptions, best estimate or including margins for adverse deviations (MFAD)

• Separate General SOP project likely to require “Independently Reasonable Assumptions” before Pension SOP is concluded

• Discount rates may reflect expected return on pension fund assets but CIA guidance on maximum discount rates is contemplated

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• Going Concern Valuations (Continued)• MFADs may not be required depending on

circumstances

• The extent of MFAD in each significant assumption is to be disclosed

• Smoothed asset values permitted but disclosure of funded status using market value required

• Concept of consistency between asset valuation method and discount rate is removed

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• Draft SOP Contents

3200 Advice on the Financial Condition, Financial Position, Funded Status or

Funding of a Pension Plan• includes going concern, hypothetical wind-up

and solvency valuations• includes external user reporting requirements

3300 Full or Partial Wind-up of a Registered Plan

3400 Accounting for Pension CostsSubstantial re-organization from current SOP, a cross reference table is provided

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• Other Draft SOP Changes• Circumstances of the Work

• Whether advice relates to the financial condition, financial position, funded status, funding or a combination thereof

• The terms of engagement (may include a formal or informal funding policy)

• The law

• The objectives of funding (if the work is related to funding)

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• Other Draft SOP Changes• Objectives of Funding

• Primary: systematic accumulation of dedicated assets (security)

• Other: may be specified by terms of engagement e.g. orderly and rational allocation, inter generational equity

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• Other Draft SOP Changes• Actuarial Cost Methods

• Not restricted to going concern valuations

• Limitation that forecast method not to be used for registered plan valuations is eliminated

• Specification that forecast period sufficiently long that the “valuation reflect the long term cost allocation pattern” is eliminated

• Specific requirement to include salary projection for final average plans is eliminated

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Actuarial Standards Board – Pension Specific Standards• Other Draft SOP Changes

• Terminology

• Definition of funded status is introduced relative to going concern valuation

• difference between value of assets, and actuarial present value of projected benefits allocated to periods up to the calculation date

• No reference to “liabilities” which are reflected in a statement of “financial position”

• The actuarial present value of projected benefits allocated to periods up to the calculation date is more in the nature of a “funding target” than a “liability”

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• Other Draft SOP Changes• Hypothetical Wind-up Valuations

• Assets valued at Market Value vs. Liquidation Value for actual wind-up

• Explicit assumption for expenses is required

• Details on postulation of scenarios, recognition of contingent benefits, disregard of extremely unlikely scenarios

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• Other Draft SOP Changes• Actual Wind-up Valuations

• Contemplates possibility of unspecified settlement methods other than commuted value or annuity purchase

• Eliminates proviso that wind-up expenses may be ignored if funded ratio over 100%


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• Other Draft SOP Changes• Accounting Valuations

• Reporting requirements may be satisfied by reference to a funding valuation report e.g. data or plan provisions

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• Educational Guidance• The following topics are contemplated:

• Hypothetical wind-up service cost and gain/loss

• Risk analysis

• Discount rates for going concern valuations

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Future Timeline

Comment Deadline: November 14, 2008

Release of Exposure: Draft, targeted

March 2009

Final Decisions of: ASB

2009

Implementation Date: TBD

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• Process• Joint ASB/PPFRC Working Group established by ASB

as the “designated group” for the Standard

• The Working Group is supported by Chris Fievoli, CIA Resident Actuary to compile comments

• PPFRC responsible for developing Educational Notes for approval by Practice Council