BEST PRACTICES: Procuring Actuarial Services Flashcards
State and local governments should take the appropriate steps to obtain high-quality actuarial services for their public retirement plans.
What is the fundamental financial objective of public employee defined benefit and hybrid plans?
To fund the long-term cost of benefits in a fiscally sustainable manner.
What role do actuaries play for public retirement plans?
Determining the funded status of a plan, necessary contributions, and acting as technical advisors.
What are the steps recommended for obtaining high-quality actuarial services?
Identify services required, establish selection criteria, develop an RFP, determine actuary’s objectivity, establish working procedures, periodically review and rebid contracts.
What additional services might actuaries provide for a plan or employer?
Asset/liability studies, effect of benefit changes calculation, experience studies, and GASB financial reporting compliance.
What credentials and experience should the supervising actuary possess?
Must meet the American Academy of Actuaries Qualification Standards and have significant public-sector experience.
What should a clear and concise RFP for actuarial services include?
Plan description, scope of services, information about the firm, work process, costs and terms, and transition plan.
What should actuarial valuations involve?
Obtaining demographic and financial data, calculating actuarial values, and preparing the valuation report.
How often should actuarial contracts be reviewed and potentially rebid?
Contracts should be for multiyear periods of at least five years, with actuarial audits recommended at least every five years.
What additional qualifications are necessary for actuaries of OPEB plans providing retiree health care?
Experience and expertise with retiree health-care plan design, OPEB accounting and reporting, and governmental funding arrangements.
