SOA - Examination and Other Requirement Details

Examination and Other Requirement Details

Retirement Company/Sponsor Perspective (CSP) Exam U.S. and Canada Exam
Spring 2007

This exam is administered as Retirement Benefits U.S.–Company/Sponsor Perspective (CSP–RU) and Retirement Benefits Canada–Company/Sponsor Perspective (CSP–RC), each of which has its own reading list and national concentration.  Candidates will write one of these exams.

The CSP–RC examination consists of 6 hours of written–answer questions.  A read–through time will be given prior to the start of the exam, 15 minutes in the morning session and 15 minutes in the afternoon session. 

The CSP–RU examination consists of 41/2 hours of written–answer questions.  A read through time of 15 minutes will be given prior to the start of the exam.
 
Starting in 2007, candidates who are taking the U.S. Retirement Benefits track to FSA will be required to have credit for both segments of the EA2 exam.   The U.S. version of the Retirement Design and Pricing (DP–U) exam, as well as the U.S. version of the Retirement Company/Sponsor Perspective (CSP-U) exam, will not include material tested on the EA exams.  Consequently, the length of the DP–U exam will be 3½ hours and the CSP–U exam will be 4½ hours.  The DP and CSP exams for the other tracks will each be 6 hours.

Learning Objectives

1. The candidate will be able to analyze the risks faced by retirees and the participants of a defined benefit or defined contribution retirement plan.
   
   Learning Outcomes:
   The candidate will be able to:
   
   
1. Identify risks faced by retirees and the elderly
2. Propose ways in which retirement plans can manage the range of risks faced by retirees
3. Describe the risks faced by participants of a government sponsored retirement plan
4. Describe the risks faced by participants of single employer sponsored retirement plans
5. Describe the risks faced by participants of a multi employer retirement plan
6. Evaluate benefit adequacy for members of a particular plan given other sources of retirement income.
7. Construct a model for measuring replacement income adequacy under different scenarios.
   
   
2. The candidate will be able to evaluate sponsor’s goals for the retirement plan
   
   Context:  Sponsor is the entity establishing the plan and operates in private sector, public sector, tax-exempt, and multi employer environment Retirement plans include qualified/registered, supplemental and deferred compensation retirement plans
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Describe the agency relationship between management of the sponsor and its shareholders or taxpayers.  
   2. Compare the, sometimes conflicting, interests of management, employees, shareholders or taxpayers (in the case of public sector)
   3. Describe ways to identify and prioritize the sponsor’s goals related to the design of the retirement plan.
   4. Given a context, assess the feasibility of achieving the sponsor’s goals for their retirement plan.
   5. Given a context, assess the tradeoffs between different goals and prioritize them.
   6. State relationship or recognize contradictions between management’s and shareholders’ goals and the retirement risks faced by retirees.
   7. Assess the appropriateness of the retirement plan features in relation to the sponsor’s total compensation structure.
   8. Assess how retirement plan features create shareholder value.
      
      
3. The candidate will be able to evaluate risks faced by sponsors of a retirement plan by virtue of the plan’s design and be aware of methods to mitigate these risks.
   
   Context:  Sponsor is the entity establishing the plan and operates in private sector, public sector, tax-exempt, and multi employer environment.  Retirement plans include qualified/registered, supplemental and deferred compensation retirement plans
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Identify how plan feature, temporary or permanent, can adversely affect the plan sponsor.  For example -An early retirement window offering –
   2. Recommend ways to mitigate the risks identified with particular plan feature [e.g., cap on an open-ended COLA]
   3. Analyze the issues related to plan provisions that cannot be removed.
   4. Describe plan design features to handle the changes in the demographics of the labor force.
   5. Compare the economic value of different plan designs for different stakeholders.
   6. In a given context, assess the effect that changes in plan design might have on collectively bargained agreements
   7. Assess the impact of possible changes in plan design legislation
      
      
4. The candidate will be able to evaluate and recommend a plan design appropriate for the sponsor’s goals.
   
   Context:  These recommendations will be appropriate for the sponsor’s business and financial environment, workforce objectives and other HR programs.  This would incorporate, for example, application of the sponsor’s general industry, philosophy, labor force objectives, financial situation/objectives and total compensation objectives.  These recommendations will be appropriate for a particular employee group including, salaried, hourly, unionized and executive employees.
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Given a context, design retirement programs that manage retirement risk and are consistent with sponsor objectives.  
   2. Given a context, design retirement programs that promote employee behavior consistent with sponsor objectives.  
   3. Given a context and sponsor objectives, recommend an appropriate plan type for providing retirement benefits and defend the recommendations.
   4. Given a context and sponsor objectives, evaluate the pros and cons from both a sponsor and employee perspective of introducing options allowing for flexible retirement such as phased retirement, DROPs and flexible pension plans.
   5. Given a context and plan type, recommend appropriate plan design/features and defend the recommendations.
   6. Identify the ways that regulation impacts the sponsor’s plan design goals
   7. Recommend a method to integrate government-provided benefits with retirement plan designs in order to meet the plan sponsor’s particular goals and defend the recommendation.
      
      
5. The candidate will be able to synthesize and evaluate deferred compensation and supplemental retirement plans for the highly paid in a given context.
   
   Learning Outcomes:
   The candidate will be able to, for a deferred compensation or supplemental executive retirement plan:
   
   
   1. Differentiate between situation where management and shareholders objectives for executive plans coincide and where they differ.
   2. Given a context, recommend a plan to meet the sponsor’s objectives and defend the recommendation.
   3. Given a context, assess the plan from an executive’s perspective. 
   4. Analyze the options for securing the benefit promise.
   5. Assess the taxation issues-.
   6. Identify and assess the impact of regulatory constraints.
   7. Describe accounting  for these plans and the options available
      
      
6. The candidate will be able to understand the general applicability and design of long-term incentive plans
   
   Learning Outcomes:
   
   
   1. The candidate will be able to identify and describe the design of long-term incentive plans, including: Bonus/performance plans
   2. The candidate will be able to summarize the accounting treatment of these plans
      
      
7. The candidate will be able to evaluate the sponsors financial goals and risk management with respect to their plan
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Describe ways to work with the sponsor on identifying and prioritizing the goals of management and shareholders related to the financial management of their retirement plan.
   2. Compare the, sometimes conflicting, interests of management, employees, shareholders or taxpayers
   3. Define the retirement plan risks (financial and design) in a way that integrates with the sponsor’s risk management strategy
   4. Analyze how the retirement plan integrates into the sponsor’s overall financial position.
   5. Describe how retirement plan accounting impacts the sponsor’s overall financial results.
   6. Demonstrate how the retirement plan’s cash inflows and outflows can affect the plan sponsor.
   7. Recommend an appropriate funding policy in line with sponsor goals and professional standards.  The candidate will be able to defend the recommendations.
   8. Describe how a plan’s funded status can impact union negotiations and multi employer plans
      .
8. The candidate will be able to recommend and advise on the financial effects of funding policy and accounting in line with the sponsors goals, given constraints
   
   Context:  Private, industry, multi employer, public, multinational companies
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Compare the financial economics perspective to the traditional perspective on funding and accounting for retirement plans.
      
      
   2. Recommend an appropriate funding method and asset valuation method in line with the sponsor’s investment policy and funding goals.  The candidate will be able to defend the recommendation.
      
      
   3. Advise retirement plan sponsors on funding costs including tax deductibility, required contributions
      and other alternatives to meet the sponsor’s goals.  This would be consistent with government
      regulation.
      
      
   4. Advise plan sponsors on accounting costs and disclosures for their retirement plans.  This would include restrictions imposed by applicable accounting authorities (FASB, CICA, IASC, FRS17)
      
      
   5. From a financial economics perspective, describe differences in economic value on the basis of the financial strength of the sponsoring company.
      
      
   6. Perform valuations for the following special purposes, and advise plan sponsors on their financial implications
      
      • Plan Mergers and Acquisitions
      • Spin-offs 
      • Conversions from one plan type to another
   7. Perform and interpret the results of deterministic projections for short and long range planning including the effect of proposed plan changes
      
      
9. The candidate will be able to synthesize plan design and funding/accounting/economic value
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Explain the interplay between plan design and plan funding/accounting/economic value
      Integration and synthesis of the readings in other learning objectives, etc.
   2. Given the sponsor’s goals, recommend an integrated plan (design and funding/accounting/economic value) and defend the recommendation
      Integration and synthesis of the readings in other learning objectives, etc.
   3. Demonstrate the sensitivity of cost and economic value to given changes in plan design
      
      
10. The candidate will be able to analyze the regulatory environment as it effects retirement plans
    
    Learning Outcomes:
    The candidate will be able to:
    
    
    1. Evaluate the effect of regulatory policies and restrictions, for all retirement plans, associated with:
       • Plan design
       • Plan establishment
       • Plan amendment
       • Plan termination/windup
       • Plan merger or spin-off
       • Reporting requirements
       • Members’ rights
       • Plan funding
       • Contributions and benefits
       • Individual savings plans
       • Coordination of individual and employer sponsored retirement plans.
       • Economic value to shareholders 

    2. Evaluate the tax implications of retirement plan designs and funding alternatives for the plan sponsor, shareholders and the participants.

    3. Where regulations for tax-assisted retirement plans conflict with sponsor’s and shareholders’ goals, the candidate will be able to describe and recommend alternatives.

    4. Explain the moral hazard that arises from the existence of outside (government) guarantees on the plan benefits.

    5. Describe and recommend proper plan governance practices and the sponsor’s fiduciary responsibility
       
       
11. The candidate will be able to analyze the issues facing retirement plan sponsors regarding investment of fund assets and make recommendations on the actuarial issues*
    
    

    *Note: the candidate is not expected to provide advice on investment of plan assets

    Learning Outcomes:
    The candidate will be able to:

    
    
    1. Assess the different types and combinations of investment vehicles for providing retirement benefits given the particulars of the sponsor's financial circumstances, philosophy, industry, workforce and benefit package.
    2. Distinguish the various ways that retirement fund assets are managed.
    3. Given a context, evaluate a Statement Of Investment Policy.
    4. Assess the potential effects of various investments and investment policies on plan funding (short and long-range), accounting, design and administration.
    5. Assess the potential effects of various investments and investment policies on all of the stakeholders, including tax implications.
    6. Model the effect on setting investment strategy of factors including, cash flow requirements, various plan designs and various economic environments.
    7. Describe the regulatory restrictions on retirement plan assets.
    8. Identify the sources of investment risk and assess risk facing retirement funds.
    9. Evaluate immunization strategies and other hedging techniques for asset/liability management.
12. The candidate will be able to apply the standards of practice and guides to professional conduct
    
    Learning Outcomes:
    In general or given a context, the candidate will be able to:
    
    
    1. Apply the standards related to communications to plan sponsors and others with an interest in an actuary’s results (i.e., participants, auditors, etc.).
    2. Explain and apply the Guides to Professional Conduct.
    3. Explain and apply relevant qualification standards 
    4. Demonstrate compliance with legal requirements regarding the actuaries responsibilities to the participants, plan sponsors, etc
    5. Explain and apply all of the applicable standards of practice related to valuing retirement obligations.
    6. Recognize situations and actions that violate or compromise Standards or the Guides to Professional Conduct. 
    7. Recommend a course of action to repair a violation of the Standards or the Guides to Professional Conduct.

Textbooks on Retirement Company/Sponsors Perspective (CSP) U.S. Exam

Handbook of Canadian Pension & Benefit Plans, Morneau Sobeco, 2005, Thirteenth Edition, CCH Canadian, Chapters 1, 2, 4–7, 11 (background only), 15

Fundamentals of Private Pensions, McGill, D.M., Brown, K.N., Haley, J.J., Schieber, S.J., 2005. Eighth Edition, Oxford Press, Chapters 1, 5, 7, 8 (pp.196–202), 14, 16 (pp. 427-441 only) 18, 24

Pension Planning, Allen, E.T., Melone, J.J., Rosenbloom, J.S., Mahoney, D.F., 2003, Ninth Edition, Irwin/McGraw Hill, Chapters 1(pp. 2–10 only), 2, 3, 13 (pp. 237-242 only), 14, 15 (pp. 259-272 only), 20–23

Pensions in the Public Sector,  Mitchell, O.S., Hustead, E.C., 2001, University of PA Press, Chapters 1, 2 (pp. 33-35 only), 4 (pp. 98-101 only), 9, 12

FAS 87 (Exclude paragraphs 54, 57–62. 76–77, Appendix A, Appendix B illustration 2 and 6, Appendix C), Appendix D is for background only

FAS 88 (Exclude paragraphs 19–21, Appendix A, Appendix B illustration 6)

FAS 106 (Exclude paragraphs 74, 79–84, 86–89, 108–115, Appendix A, Appendix C illustrations 3 and 7 and Appendix D)

FAS 132 (Exclude paragraphs 12, 13, Appendices A, B & D), Appendix E for background only

FAS 158 through Appendix A

Textbooks on Retirement Company/Sponsors Perspective (CSP) U.S. Exam  that may be avialable as study notes. CHeck this page for updates.

Retiree Group Benefits, Yamamoto, D., 2007, ACTEX, Chapter 5: R-C806-07

Managing Investment Portfolios, Maginn, J.L., Tuttle, D.L, Third Edition, Chapters 3, 6, 7: R-C134-07

Private Pension Policies in Industrialized Countries – A Competitive Analysis, Turner, J., Watanabe, N., 1995, W.E. Upjohn Institute for Employment Research, Chapters 5, 6: R-C102-07 and R-C128-07

Textbooks on Retirement Company/Sponsors Perspective Canada Exam

Canadian Pensions and Retirement Income Planning, Watson Wyatt, Third edition, 2006, CCH Canada Limited, Chapters 5, 11–17, 21, 22

Employee Future Benefits – Additional Disclosures, Background Information and Basis for Conclusion, Includes Section 3461 from the CICA Handbook – Accounting., Canadian Institute of Chartered Accountants,  omit pp. 1–21, 29–34 and 111–115

Handbook of Canadian Pension & Benefit Plans, Morneau Sobeco, 2005, Thirteenth Edition, CCH Canadian, Chapters 1, 2, 4–10, 11 (background only), 15, 24

Fundamentals of Private Pensions, McGill, D.M., Brown, K.N., Haley, J.J., Schieber, S.J., 2005. Eighth Edition, Oxford Press, Chapters 1, 14, 16 (pp. 427-441 only) 18, 24

Pension Planning, Allen, E.T., Melone, J.J., Rosenbloom, J.S., Mahoney, D.F., 2003, Ninth Edition, Irwin/McGraw Hill, Chapters 1(pp. 2–10 only), 2, 13 (pp. 237-242 only), 14, 15 (pp. 259-272 only), 22, 23

Pensions in the Public Sector,  Mitchell, O.S., Hustead, E.C., 2001, University of PA Press, Chapters 1, 2 (pp..33-35 only), 4 (pp. 98-101 only), 9, 12

FAS 158  excluding Appendices

Textbooks On Retirement Company/Sponsor Persective (CSP) Canada. Exam That May Be Available As Study Notes. Check This Page For Updates

• Managing Investment Portfolios, Maginn, J.L., Tuttle, D.L., Third Edition, Chapters 3, 6, 7: R–C134–07
•  
• Private Pension Policies in Industrialized Countries - A Competitive Analysis, Turner, J., Watanabe, N., 1995, W.E. Upjohn Institute for Employment Research, Chapters 5, 6: C102–07 and R–C128–07

Retirement CSP Online Readings-U.S.

The Online readings listed below are part of the required Course of Reading for this Exam. These readings are articles that are available online from the SOA, CCA, CIA, AAA and the ASB.

• ASOP 2 “Recommendations for Actuarial Communications Related to Statements of Financial Accounting Standards Nos. 87 and 88,“  April 1987
• ASOP 4 “Measuring Pension Obligations”, October 1993
• ASOP 23 “Data Quality”, December 2004
• ASOP 27 "Selection of Economic Assumptions for Measuring Pension Obligations", December 1996
• ASOP 35 "Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligation", December 1999
• ASOP 41 “Actuarial Communications”, March 2002
• “Post Retirement Risks Chart,” SOA
• “Addressing the Financial Risks from Retirement Systems: Identifying Risks Inherent in Retirement Plans”, RSA 31 No 2, June 2005
• “Key Findings and Issues: How Americans Understand and Manage Their Retirement Risks”, SOA, April 2006
• “Pension Funds—A Company Manager’s View”, SOA, June 2003
• “Retirement Benefits, Economics and Accounting: Moral Hazard and Frail Benefit Designs,” NAAJ, January 2005
• “Downsizing and Plan Design”, RSA 21 No. 3A
• “Actuarial Aspects of Cash Balance Plans,” The Pension Forum, December 2000, Volume 12. No. 1 (Appendix A, background only)
• “Addressing the Financial Risks from Retirement Systems Seminar: Plan Design”, June 2005, RSA 31 No. 2
• “Gradual Retirement: An Additional Option in Work and Retirement”, SOA Monograph, June 2002
• “Protecting Participants and Beneficiaries in a Phased Retirement World” SOA Monograph, June 2002
• “Pension Funds and the U.K. Economy”, SOA Monograph, June 2003
• “Accounting/Actuarial Bias Enables Equity Investment by Defined Benefit Pension Plans”, NAAJ, July 2005
• “Financial Economics and Actuarial Practice”, NAAJ July 2004
• “The Earnings Implications of Pension Expense: A Stochastic Analysis of Ten Canadian Companies”, NAAJ, October 2005
• “Macroeconomic Aspects of Private Retirement Programs”, NAAJ, July 2001
• “The Shift to Defined Contribution Pension Plans, Why did it not Happen in Canada?” NAAJ, July 2001
• The Pension Forum April 2005, Vol. 16 No. 2
• “Improving Pension Funding: What’s In It For Me?” SOA Monograph, 2005
• “Full Circle:  Purchasing Insured Annuities in a Defined-Benefit Plan” SOA Monograph, 2004
• The Pension Forum, Volume 16, No. 1, January 2005

Retirement CSP Online Reading–Canada

The Online readings listed below are part of the required Course of Reading for this Exam. These readings are articles that are available online from the SOA, CCA, CIA, AAA and the ASB.

• ASOP 27 "Selection of Economic Assumptions for Measuring Pension Obligations", December 1996
• ASOP 35 "Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligation", December 1999
• "Post Retirement Risks Chart", SOA
• "Gradual Retirement: An Additional Option in Work and Retirement", SOA Monograph, June 2002
• "Protecting Participants and Beneficiaries in a Phased Retirement World" SOA Monograph, June 2002
• "Addressing the Financial Risks from Retirement Systems: Identifying Risks Inherent in Retirement Plans", RSA 31 No 2, June 2005
• "Key Findings and Issues: How Americans Understand and Manage Their Retirement Risks", SOA, April 2006
• "Pension Funds-A Company Manager's View", SOA, June 2003
• "Retirement Benefits, Economics and Accounting: Moral Hazard and Frail Benefit Designs," NAAJ, January 2005
• "Downsizing and Plan Design", RSA 21 No. 3A
• “Actuarial Aspects of Cash Balance Plans,” The Pension Forum, December 2000, Volume 12. No. 1 (Appendix A, background only)
• “Addressing the Financial Risks from Retirement Systems Seminar: Plan Design”, June 2005, RSA 31 No. 2
• “Pension Funds and the U.K. Economy”, SOA Monograph, June 2003
• “Accounting/Actuarial Bias Enables Equity Investment by Defined Benefit Pension Plans”, NAAJ, July 2005
• The Pension Forum April 2005, Vol. 16 No. 2
• “Financial Economics and Actuarial Practice”, NAAJ July 2004
• “The Earnings Implications of Pension Expense: A Stochastic Analysis of Ten Canadian Companies”, NAAJ, October 2005
• “Improving Pension Funding: What’s In It For Me?” SOA Monograph, 2005
• “Macroeconomic Aspects of Private Retirement Programs”, NAAJ, July 2001
• “The Shift to Defined Contribution Pension Plans, Why did it not Happen in Canada?” NAAJ, July 2001
• “Full Circle:  Purchasing Insured Annuities in a Defined-Benefit Plan” SOA Monograph, 2004
• The Pension Forum, Volume 16, No. 1, January 2005

Retirement Benefits CSP Study Note Listing

The study notes listed below are part of the required Course of Reading for this exam. These Study Notes are not available electronically and must be ordered by using the
Study Note Information Form located on the Study Note Information Page.Candidates should be sure to check this site periodically for additional corrections or notices.