New Actuarial Standard on Transformations is Published
News types: Codes and Standards Announcements, Publications
Published: 16 December 2010
The FRC’s Board for Actuarial Standards (BAS) has today published its standard for actuarial work concerning pension and insurance transformations, building on the foundation laid by its standards on Reporting, Data and Modelling.
In making a transformation, an insurer or pension scheme sponsor seeks to change the benefits of insurance policyholders and pension scheme members without having to obtain their consent. There is often a separate body – usually a court or pension scheme trustees – with a role in determining whether or not the transformation may proceed. The new standard will help to ensure that those making decisions about transformations can rely on actuarial information to help them understand the potential effects on beneficiaries. It requires actuaries to analyse the impact of the proposed transformation by adopting assumptions which place proper emphasis on the interests of all parties, and to indicate how that impact might change under different scenarios.
Commenting on the new standard, Jim Sutcliffe, Chairman of the BAS, said:
“Legislation places an important responsibility on trustees and courts to consider how proposed transformations might affect a wide range of beneficiaries. The complexity of the analysis required means that they will rely heavily on actuarial work. We have laid out principles that we believe will help ensure that the work is not only of a high quality, but conveys clearly the uncertainties and risks associated with the proposed transformation.
The transformations standard sets a new benchmark in ensuring that users receive the actuarial information they need to make the best decisions.”
The BAS has also published a document Transformations TAS: Significant Considerations which reviews the considerations and arguments that were thought significant by the BAS in developing the transformations standard.
Notes to Editors
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The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
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The Board for Actuarial Standards has a primary objective of promoting competence and transparency of actuarial practice by establishing and improving actuarial technical standards and ensuring that they are coherent, consistent and comprehensive.