Description: This panel discussion session reported on the status and content of the Actuarial Standards Board standard dealing with the selection of assumptions. The discussion covers what the effects would be on practitioners.

Description: This paper uses a Bayesian approach to persistency to explore retirement cost projection variability. The analysis is divided into two parts. In the first part a subjective population projection model is developed, based on a beta-binomial distribution for the number of participants persisting through a given age. Probability statements regarding such items as the number of participants at a given age and the distribution of retirees are developed. The second part shows how the model might be used to generate confidence intervals for retirement cost projections. Both the single-entry-age case and the multiple-entry-age case are considered. From Transactions of Society of Actuaries 1979, Vol. 31.

Description: Comments from Eric Friedman on “The Debate over Applying FE Principles to the Funding on Public Pension Plans: A Transition Proposal and Other Ideas,” by Thomas Lowman

Description: Panelists develop a framework for analyzing the diverse family of deferred recognition methods for assets under a pension plan. Using this framework, attendees learn how to assess the reasonableness of a method from both a client and a regulatory perspective – that qualify under IR Code Section 412[c][2][A] – including a case study of the evolution of smoothing methods used by a particular group of plan sponsors. From the 2002 Record of Society of Actuaries, Volume 28, No. 2. Session 76PD of the San Francisco Spring Meeting.

Description: Part 2 proposes solutions to the second of three flaws of the current financial model to obtaining the fair value of the public sector employer’s pension benefit liability.

Description: Exploration of sources of volatility in retiree health valuations, noting how volatility arises and might be mitigated, with discussion of valuation parameters more problematic for retiree health benefits than for pensions. Three significant influences on retiree health valuation volatility are covered-- changes in benefit level, fluctuations in cost level, and alterations in eligibility for, or duration of, benefit – and attention focused on the last two. Specific conclusions result in recommendations, which are supported by practical examples contrasting volatile measurement results with those likely from the recommended practices. Theoretical discussion includes health claim variation, health trend usage, financial economics, option pricing, discount rates, and deterministic vs. stochastic modeling.

Description: Panel discusses the selection of both economic and demographic assumptions in funding pension plans. They include the impact on selection of economic assumptions from the recently released Actuarial Standard of Practice [ASOP] No. 27, 'Selection of Economic Assumptions for Measuring Pension Obligations.' From the 1997 Record of Society of Actuaries, Vol. 23, No. 3.

Description: The standard for measuring retirement income adequacy has been the final earnings replacement rate (usually targeted at 70%). But - does it work?

Description: Defined benefit DB pension plans continue to dominate the retirement landscape for the roughly 20 million state and local government workers in the United States. In most state and local plans, pension benefits are protected by constitutional, statutory, or common law guarantees. In many cases, these guarantees make the benefit promises to participants virtually free of risk. Finance theory is unambiguous that the discount rate used to value future pension obligations should reflect the riskiness of the liabilities.

Description: Eric Friedman’s comments on ‘The Case for Stochastic Present Values,” by Dimitry Mindlin