The valuation of a social security scheme includes the reconciliation of the value of the sustainability measures, financial indicators and other relevant results between the previous and current valuations. As part of the risk management of the social security scheme, the social security institution examines the main drivers of the changes in results between successive valuations.

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.

The projection model is built on actuarially sound principles. It is capable of assessing the material provisions of the social security scheme, projecting its cash flows over the relevant projection period, and evaluating the chosen sustainability and adequacy measures, if appropriate.

The valuation methodology is consistent with the social security scheme financing approach and enables the actuarial assessment of its sustainability measures or indicators. The actuary provides an opinion on the appropriateness of the methodology.

Assumptions used for a valuation of a social security scheme are sufficient to value the scheme in accordance with its financing objectives and consistent with the overall socio-economic environment of the country. The development of assumptions combines the analysis of historical trends with a forward-looking approach. Social security institutions assign major responsibilities to an actuary in the assumption-setting process.

The social security institution ensures the availability of sufficient and reliable data necessary to perform actuarial work. The social security institution is responsible for the management of the data pertaining to the social security scheme participants and provisions, and compliance with data privacy legislation and national standards.

The social security institution ensures that regular actuarial valuations are conducted to assess and monitor the financial situation of social security programmes. The social security institution further ensures that an actuarial valuation is conducted at the inception of a new programme, or whenever an existing programme is materially changed.

Valuations of a social security scheme are aimed at assessing their actuarial soundness. Soundness may be defined in a variety of ways and social security institutions should define measures of soundness appropriate to their situation and their scheme. As stated in the ISSA Guidelines on Good Governance (Guideline 59), a social security scheme should carry out regular actuarial valuations to monitor sustainability and other key elements.

These ISSA-ILO Actuarial Guidelines include the principles that social security institutions should consider in relation to actuarial work undertaken for social security schemes. They are not intended either as a detailed actuarial manual or as standards of practice. Their goal is to guide social security institutions in the “what” to consider but not the question of “how”.

The guidelines are comprised of eight separate parts:

Part A, Valuation of Social Security Schemes

Part B, Operational Management of Social Security Systems (including benefit calculations and determination of factors)

Part C, Investment Issues

Part D, Reporting, Communication and Disclosure

Part E, Risk Management and Analysis

Part F, Regulatory Issues, Standards and Professional Guidance

Part G, Policy and Strategy Issues