In determining the rate of return to be credited to provident fund accounts of beneficiaries the actuary considers relevant factors, the impact of decisions on the sustainability of the scheme and the adequacy of benefits. The actuary uses his or her judgement in developing appropriate assumptions and methodology and in making recommendations.

Actuarial factors are determined in accordance with generally accepted actuarial principles. There is no unjustified or unfair discrimination in the calculation of factors.

This guideline refers to the calculation of factors used to determine benefit entitlements in defined benefit schemes. These factors include but are not limited to early and late retirement factors, conversion rates of lump sum to periodical payments and vice versa as well as the determination of total and partial disability benefits and other social security benefits.

The social security institution calculates benefit entitlements according to the provisions of the laws and regulations governing the scheme. All actuarial calculations necessary to calculate benefit entitlements are carried out in accordance with generally accepted actuarial principles, and an appropriate peer review process is established.

The actuary is likely to play a major role in issues relating to the day-to-day management and operations of the social security scheme. These roles will include the calculation of benefit entitlements for individuals and the factors to apply in certain situations. The methodology and assumptions used as well as appropriate peer review processes are crucial. The deliberations of the actuary will have a significant impact on the adequacy of benefits and the sustainability of systems.

The social security institution addresses and ensures implementation in a timely manner of the recommendations made by the operational audit and the independent expert review.

A social security institution commissions on a regular basis an independent expert review of the work carried out in respect of the social security scheme valuation. The actuary responsible for the valuation fully cooperates with the independent reviewers.

If a social security institution has an internal actuarial department, a regular audit of its operations is to be conducted. If a social security institution employs an external actuarial provider, the parties agree on the ways the social security institution monitors the appropriateness of the external provider’s processes.

In preparing a report on the actuarial valuation of a social security scheme, an actuary considers legislative requirements and relevant professional standards and guidance, as well as the intended audience.

The valuation of a social security scheme includes analysis of future uncertainties and their impacts on the scheme. An actuary identifies and, if possible, quantifies risks stemming from future uncertainties.

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.