Actuarial practice has a long history of using smoothing methods to help plan sponsors manage cost volatility in benefit programs. The practice of volatility management in defined benefit plans stems from a desire to simultaneously balance the sometimes contradictory goals of:

• Benefit Security,
• Contribution Sufficiency,
• Cost Stability and Predictability,
• Intergenerational Equity.

Volatility management can take many forms whether focused on smoothing inputs or outputs. This call for papers addresses smoothing techniques more broadly than just asset smoothing. Some examples of where smoothing has been applied include:

• Actuarial Value of Assets–Smoothing periods are allowed by funding and accounting rules
• Actuarial Assumptions based on historical averages such as the funding discount rates under PPA
• Corridors for recognizing gains/losses–such as the 10 percent corridor in standards ASC 715-30 (formerly SFAS87) and ASC 715-60 (formerly SFAS106)
• Amortization periods for funding or expensing unfunded liabilities–prescribed for private employer plans but open to a range of choices in public plans

Current regulatory trends, particularly for private sector pension plans, have been to narrow options available to manage volatility and instead focus on market-based or snapshot measures of assets and liabilities. This contrasts with practices in public sector pensions where traditional actuarial smoothing methods continue to be used extensively. This divergence of practice is a source of debate within the actuarial profession.

This trend to mark pension assets and liabilities to market at least for disclosure and expense purposes, has not eliminated the desire to find contribution policies that balance the goals of cost stability and predictability with benefit security, as well as inter-period equity among generations of funding sources. In fact, a concern voiced by some is that removing smoothing techniques increases volatility to unsustainable levels, and is in part a cause for the decline of traditional defined benefit pensions. Others argue that using smoothing techniques simply masks the true situation and often results in poor risk management decisions or in shifts of risks and cost between generations.

Based on this discussion, the Society of Actuaries is calling for papers concerning volatility management and actuarial smoothing techniques across a broad range of issues. Members may recall that a collection of papers was published on asset smoothing in 2001; this most recent effort is intended to broaden the discussion to other volatility management approaches as well as to update the discussion of asset smoothing following the recent periods of high investment return volatility.

Authors may submit either original research or expository papers. The papers have no required minimum or maximum length.

The following is a list of potential topics that authors may wish to consider. Please note these topics are only intended to serve as examples and are not meant to restrict potential ideas in any way: Broad Topics

• What is the ongoing role for actuarial smoothing?
• How did smoothing / volatility management approaches perform in recent years?
• Does the role for actuarial smoothing vary for the type of plan or purpose of measurement? For example, are some tools relevant to public plans and others to private employer plans? What about managing expense volatility versus contribution volatility?
• Are there any potential conflicts between the use of particular volatility management techniques and our "profession's responsibility to the public?"
• What new volatility management techniques are being developed?
• Are there limits to actuarial smoothing methods? For example, are there areas where smoothing is or is not appropriate?
• Are there actuarial smoothing pitfalls and, if so, how can they be avoided?
• What is the relationship between volatility management and economic and market cycles?

As mentioned above, this is just a sample of topics that may fall under the scope of this Call for Papers. Authors may also combine several topics when developing their abstracts.

Please submit an abstract or outline of your proposed paper by April 15, 2011 to:

• Barbara Scott
• Society of Actuaries
• f: 847.273.8592
• e-mail: bscott@soa.org

At a minimum, the abstract submission should include a brief description of the subject of the paper, a list of key items to be covered and a brief biographical paragraph summarizing the author's experience, prior publications and presentations and contact information.

Submitted abstracts will be evaluated by a review group for their potential for presentation at an SOA-sponsored event targeted in 2011. The exact dates and details will be decided at a later time.

Abstract submissions will be accepted, accepted subject to revision or declined.

All papers must be based on accepted abstracts and submitted in a complete format no later than September 15, 2011.

The procedure for submission of papers includes the following specific guidelines:

• Submissions with special publication requests should include them in the original submission.
• Submissions should be made electronically to Barbara Scott at bscott@soa.org

The review group, after receiving all submissions, will determine if a meeting event for presenting the papers is appropriate. Should this occur:

• It is anticipated that travel and lodging expenses for authors selected to present at the event will be reimbursed, up to certain limits.
• A final determination as to the number of papers invited to present will be made after all abstracts have been submitted and reviewed.

It is anticipated that all accepted papers will be published. The papers will appear in an on–line monograph and, where appropriate, in Society of Actuaries publications. Upon author request, accepted papers may also be submitted to peer–reviewed journals.

The Society of Actuaries prefers to publish all papers and to copyright all published papers without a previous copyright. However, it will work with authors as necessary for special publication situations.

The Society of Actuaries reserves the right to reject or not publish any papers not meeting the criteria and standards set by the review group.

Please direct any questions regarding this Call for Papers to:

• Steven Siegel, Research Actuary
• Society of Actuaries
• ph: 847.706.3578
• f: 847.273.8578
• e–mail: ssiegel@soa.org