The Mortality Assumptions in Pensions Working Party was set up by the Regulation Board in response to a specific situation relating to the use of, and disclosure in relation to, models used in pension funding investigations. Specifically, the Working Party was asked to identify and investigate public interest issues relating to mortality assumptions setting methodologies in defined benefit pension schemes.
Specifically, the Working Party was asked to identify and investigate public interest issues relating to mortality assumptions setting methodologies in defined benefit pension schemes.
A risk was identified around the level of disclosure required for two actuaries to reach a consensus or mutual understanding of each other's position in pension funding investigations. The Working Party concluded that this risk relating to the level of disclosure was not just confined to models used in mortality assumption setting, nor indeed to models used in pensions. The Working Party recommended that a Risk Alert should be issued.
The Regulation Board agreed with the Working Party's recommendations and a Risk Alert was issued to all members on 13 May. The Risk Alert draws attention to the amount of information an actuary should expect to disclose in relation to the model they are relying on. As set out in the Risk Alert, this disclosure obligation is not just confined to the actuary's client and may, in certain situations, extend to other actuaries.
The Risk Alert can be found on the IFoA website at bit.ly/2HnuHuV