CH1: Actuarial Advice

Question 1

List three public sector stakeholders that an actuary may advise.

Answer 1

1. Central and local government departments
2. Regulatory bodies
3. Central banks

Question 2

List twelve stakeholders involved in a pension scheme.

Answer 2

1. Members
2. Members’ dependants
3. Trustees
4. Shareholders of the sponsor
5. Directors of the sponsor
6. Employees of the sponsor (who are not scheme members)
7. Auditors / accountants
8. Regulatory bodies
9. Government
10. Administrators
11. Investment fund managers
12. Creditors of the sponsor

Question 3

List seven areas in which actuaries can provide advice to employers.

Answer 3

1. Protection against financial loss arising from sickness or death
2. Protection of assets
3. Provision of work-related benefits that will attract and retain staff 4. Meeting legislative requirements
4. Managing the costs of running the business
5. Quantification of surplus capital
6. Investment of surplus capital

Question 4

List eight areas in which actuaries can provide advice to the board of directors of an insurance company.

Answer 4

1. Meeting legislative requirements
2. Investment and management of assets
3. Managing liabilities
4. Determining provisions
5. Premium rating
6. Meeting policyholders’ reasonable expectations
7. Good corporate governance
8. Reinsurance requirements

Question 5

List four areas in which actuaries can provide advice to the sponsors of a benefits scheme.

Answer 5

1. Providing protection benefits that meet the needs of the members and their dependants
2. Providing retirement benefits that meet the needs of the members 3. Managing the cost of providing the benefits
3. Meeting legislative requirements

Question 6

List four areas in which actuaries can provide advice to the Government.

Answer 6

1. Setting legislation that impacts on the provision of financial products, schemes, contracts and transactions that provide benefits on future financial events
2. Monitoring compliance with this legislation
3. Funding benefit provision by the State
4. Monitoring the funding of benefit provision by the State

Question 7

Before giving advice, it is important that the actuary researches and assimilates information on the client in order to understand the client’s particular position and risk appetite.
List five sources of such information.

Answer 7

1. Company accounts
2. Other published information
3. Client’s website
4. Additional information requested directly from the client (being careful to keep any sensitive information confidential)
5. Meetings and less formal discussions with the client, to help understand the client’s position and culture