In developing assumptions on the future evolution of coverage rates, the actuary should consider the following:

• In the case of a scheme covering employed workers as contributors and/or beneficiaries, the actuary should assume that the future evolution of the number of effective active contributors and/or beneficiaries will depend on the trends in the employed population.
• The actuary should analyse legal and effective coverage rates classified by major subgroups of the reference population. For example, in many countries labour force participation rates of women are significantly lower than those of men. In this case, the actuary should assess whether it is reasonable to assume that the labour force participation rates of women will increase faster than those of men.
• In the case of a scheme covering employed workers as contributors and/or beneficiaries, age-specific effective coverage rates (number of active insured persons at each age as a percentage of the total employed population at the same age) are determined as of the valuation date. The actuary, jointly with the social security institution, needs to determine whether these age-specific effective coverage rates will remain constant for the whole projection period or will gradually change in line with the trends (for example, in line with trends in the formalization of the labour market where the scheme covers formal economy wage earners and/or trends in legal enforcement). This will ensure consistency of the coverage assumptions with macroeconomic and labour trends over the long term. The resulting coverage rates should be realistic and justified.
• In projecting the effective coverage of any civil servant schemes, the actuary, jointly with the social security institution, should make an assumption regarding the rate of growth of the public sector.
• In the case of a reform to extend legal or effective coverage, the social security institution should consider different scenarios in order to illustrate the income and cost progression with expanded coverage and to provide PAYG rate projections as well as other relevant financial and demographic indicators. The actuary should use judgement when assessing coverage extension. He or she should consider the national socio-economic context and take into account the views of stakeholders.
• In developing assumptions on future effective coverage rates, the actuary should consider potential changes in programme administration and enforcement, e.g. if additional resources at the institutional level are invested into improving workplace inspection, maintaining social insurance records, and administration of benefits. The actuary must consult with management and quantify expectations.
• As coverage has significant financial implications for the scheme, the social security institution should subject the coverage variable to extensive sensitivity analysis using different demographic and economic scenarios as well as different assumptions on the coverage rate reflecting future socio-economic developments and administrative efficiency. The impacts of potential legal and administrative changes should also be considered.
• Estimates of the extent of legal coverage should use both information on the groups covered by statutory schemes for a given social security area (branch) as specified by legislation, and available statistical information quantifying the number of legally covered persons at the national level.
• When measuring the extent of effective coverage, a distinction must be made between coverage measured in terms of protected persons and in terms of actual beneficiaries:
• Protected persons are those who have or will have to the potential to be covered for benefits but may not necessarily be receiving them, e.g. those who pay social insurance contributions for a specified contingency such as old-age pensions and unemployment benefits;
• Beneficiary coverage rate describes the proportion of actual beneficiaries of social security benefits (e.g. old-age pensions, unemployment benefits) over those who should be covered (e.g. all the population over the retirement age, all unemployed people).