The basis chosen for determining the value of the social security scheme’s assets is consistent with the scheme’s sustainability measures or indicators.
This guideline should be read in conjunction with Guidelines 23 and 24.
Guideline code
ACT_00700
Mechanism
Mechanism
- An actuary should identify proper sources of information for the value of assets (e.g. audited financial statements) and assess to what extent this information is appropriate for evaluating chosen sustainability measures.
- The basis for the valuation of the scheme’s assets may include smoothing techniques in order to avoid temporary fluctuations in declared asset values and reflect asset values which are considered as more consistent with the long-term nature and time horizon of social security schemes.
- An actuary should make sure that the stated value of assets at the date of valuation properly reflects the schemes’ revenues and expenditures over the appropriate period to ensure consistency between the determination of assets and liabilities. For example, the value of assets may need to be adjusted to reflect benefits and contributions paid or received after the valuation date, but allocated to the period prior to the valuation date.
Structure
Principles
- The social security institution, with the assistance of the actuary, should choose an appropriate basis for the valuation of the scheme’s assets. This choice should be documented and reassessed on a regular basis and be consistent with measures used to assess the scheme’s sustainability.
- The actuary should provide input into decisions regarding the nature of reporting of asset values and accompanying explanatory notes.
Title HTML
Guideline 6. Determining the value of the social security scheme’s assets
Type
Guideline_1
Weight
10