The social security organization follows a well-defined reporting process with respect to the actuarial valuation of a social security scheme.
A legislated, well-established and well-defined reporting process is a vital part of the good governance procedures for social security programmes. This guideline should be read together with Guidelines 1 and 43.
Guideline code
ACT_03000
Mechanism
Mechanism
- Social security schemes providing pension benefits should be reviewed at least every five years. Where data and resources allow, and depending on the nature of scheme benefits and the financial size of liabilities, valuations should be carried out more frequently. Social security schemes such as health care, employment injury and unemployment insurance schemes should carry out actuarial reviews on an annual basis.
- A changing external environment may warrant more frequent reviews of social security schemes. Examples of such changes include economic recessions and financial market volatility resulting in significant decreases (or increases) in asset values.
- Major deadlines associated with the reporting process in regard to the actuarial review include, but are not limited to, the following:
- The maximum time period after the effective date of the actuarial review by which the actuary should provide results of the review to management and/or board of the social security institution;
- The maximum time period after the effective date of the actuarial review by which the social security institution should inform stakeholders and appropriate overseeing bodies of the results of the review;
- The maximum time period after the completion of the actuarial review by which the independent expert review is conducted;
- The maximum time period by which the actuary and/or the social security institution should act on recommendations of the actuarial and the independent expert reviews.
These deadlines should be defined either by legislation or by the internal policy of the social security institution. The social security institution should support the actuary in facilitating the timely delivery of results.
Structure
Principles
- The social security institution should comply with Guideline 43 on sustainability considerations stating that the social security institution and actuary should follow legislative requirements in regard to the frequency of actuarial assessments of a social security scheme. In the absence of legislative requirements, the social security institution should establish and follow an internal policy on the frequency of actuarial reviews.
- The frequency of actuarial reviews should reflect the nature of the social security scheme under consideration. It may be appropriate for the social security institution to ensure that more frequent reviews are performed than those required by legislation. This may be appropriate, if, in the opinion of the actuary or/and the social security institution:
- The legislative requirements with respect to the frequency of actuarial reviews are not consistent with the nature of a social security programme; and/or
- Economic or demographic environmental changes in the intervaluation period are expected to have material impacts on the financial status of a social security scheme.
- The social security institution as well as the actuary should comply with legislative deadlines with respect to producing the results of an actuarial valuation and their communication to stakeholders. In the absence of legislative requirements, the social security institution should formulate an internal policy describing the key dates and deliverables for the main steps of the actuarial review, independent expert review and communication process.
- The provision of new or expanded benefits that may materially change the contribution rate should trigger a new or updated actuarial valuation to reflect the change and assess its impacts.
Title HTML
Guideline 26. Reporting process considerations
Type
Guideline_1
Weight
33