ASOP 4 Flashcards
Does ASOP 4 require that actuaries assess the plan sponsor’s ability to make the employer contribution when due?
No. ASOP 4 does not require the actuary to evaluate the ability of the plan sponsor or other contributing entity to make contributions to the plan when due.
List types of calculations to which ASOP 4 does not apply.
ASOP 4 does not apply to actuaries when performing services with respect to individual benefit calculations, individual benefit statement estimates, annuity pricing, nondiscrimination testing, and social insurance programs.
List types of calculations to which ASOP 4 does not apply.
ASOP 4 does not apply to actuaries when performing services with respect to individual benefit calculations, individual benefit statement estimates, annuity pricing, nondiscrimination testing, and social insurance programs as described in section 1.2, Scope, of ASOP No. 32, Social Insurance (unless an ASOP on social insurance explicitly calls for application of this standard).
What is the effective date of the revised ASOP 4?
The revised ASOP 4 will be effective for any actuarial work product with a measurement date on or after December 31, 2014.
May an actuary use hypothetical participant data under ASOP 4?
When appropriate, the actuary may prepare measurements based on assumed demographic characteristics of current or future plan participants.
Does ASOP 4 always require that any actuary do precise calculations?
No. The actuary should use professional judgment to establish a balance between the degree of refinement of methodology and materiality. The actuary may use approximations and estimates where circumstances warrant.
Provide three examples of when estimates may be appropriate under ASOP 4?
- situations in which the actuary reasonably expects the results to be substantially the same as the results of detailed calculations; 2. situations in which the actuary’s assignment requires informal or rough estimates; and 3.situations in which the actuary reasonably expects the amounts being approximated or estimated to represent only a minor part of the overall pension obligation, periodic cost, or actuarially determined contribution.
What is the purpose of ASOP 4?
ASOP 4 provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a pension plan and determining periodic costs or actuarially determined contributions for such plans. This standard addresses broader measurement issues, including cost allocation procedures and contribution allocation procedures. This standard provides guidance for coordinating and integrating all of the elements of an actuarial valuation of a pension plan.
For purposes of ASOP 4, what are expenses?
Administrative or investment expenses borne or expected to be borne by the plan.
What is an Immediate Gain Actuarial Cost Method?
An actuarial cost method under which actuarial gains and losses are included as part of the unfunded actuarial accrued liability of the pension plan, rather than as part of the normal cost of the plan.
What is funded status for purposes of ASOP 4?
Any comparison of a particular measure of plan assets to a particular measure of plan obligations.
What is the measurement date for purposes of ASOP 4?
The date as of which the values of the pension obligations and, if applicable, assets are determined (sometimes referred to as the ‘valuation date’).
What is a prescribed assumption or method set by another party for ASOP 4?
A specific assumption or method that is selected by another party, to the extent that law, regulation, or accounting standards gives the other party responsibility for selecting such an assumption or method. For this purpose, an assumption or method set by a governmental entity for a plan that such governmental entity or a political subdivision of that entity directly or indirectly sponsors is deemed to be a prescribed assumption or method set by another party.
What is a prescribed assumption or method set by law for ASOP 4?
A specific assumption or method that is mandated or that is selected from a specified range or set of assumptions or methods that is deemed to be acceptable by applicable law (statutes, regulations, or other legally binding authority). For this purpose, an assumption or method set by a governmental entity for a plan that such governmental entity or a political subdivision of that entity directly or indirectly sponsors is not deemed to be a prescribed assumption or method set by law.
What is a spread gain actuarial cost method?
An actuarial cost method under which actuarial gains and losses are included as part of the current and future normal costs of the plan.
