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SOA - Examination and Other Requirement Details(9)

Spring 2007 Basic Education Catalog

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.

 

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.

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
PDFStudy Note Information Form located on the Study Note Information Page.Candidates should be sure to check this site periodically for additional corrections or notices.


U.S. & Canada    
R-C100-07Living in Retirement-Are Your Employees Really Ready? 
R-C101-07Seven Steps Toward Creating a Standout Retirement Savings Plan
R-C102-07Chapter 5 of Private Pension Policies in Industrialized Countries: A Competitive Analysis 
R-C103-07Comparison of IAS 19 with FAS 87/88/106, CICA 3461 and FRS 17-Summary of Provisions Affecting Accounting for Postretirement Benefits 
R-C104-07Replacement Ratio Study-A Measurement Tool for Retirement Planning 
R-C105-07Pension Actuary's Guide to Financial Economics 
R-C106-07The Case Against Stock in Public Pension Funds 
R-C107-07Equities in DB Plans-Is the Traditional 60/40 Mix a Dinosaur? 
R-C108-07Why Are Healthy Employers Freezing Their Pensions? 
R-C109-07Integration With Social Securityformerly 8RC-116-01
R-C110-07Chapter 15 of the Handbook of Executive Benefits 
R-C111-07Pensions & Endowments 10: The Optimal Asset Allocation Under Proposed Pension Law 
R-C112-07Pension Investing and Corporate Risk Managementformerly 8RU-306-03
R-C113-07YIKES! How to Think About Risk? 
R-C114-07A Fresh Look at Pension Risks 
R-C115-07Q-Series: Pension Fund Asset Allocation 
R-C116-07Financing the Future: How Fit is Your Pension Funding Policy? 
R-C117-07Pension Deficits: An Unnecessary Evil 
R-C118-07Pension Issues in Corporate Sales, Mergers and Acquisitionsformerly 8RU-218-00
R-C119-07Fiduciary Liability Issues for Selection of Investments 
R-C120-07Introduction and Overview of Retirement Plan Investmentsformerly 8RU-301-00
R-C121-07Converting Pension Plans From A Defined Benefit to a Defined Contribution Design-Issues to Consider in Canadaformerly 8RU-309-06
R-C122-07Statement of Investment Policies for Defined Benefit and Defined Contribution Plansformerly 8RU-305-00
R-C123-07Funding Risks for Multi-Employer Pension Plans 
R-C124-07Recent Issues in Corporate Financial Reporting 
R-C125-07Pensions and Corporate Financial Performance-Keeping Your Eye on the Ball 
R-C126-07Recent Trends in Canadian Defined-Benefit Pension Sector Investment and Risk Management 
R-C127-07Controlling the FAS 87 Balance Sheet Impact By Integrating Funding, Expensing and Asset Policiesformerly 8RU-210-03
R-C128-07Chapter 6 of Private Pension Policies in Industrialized Countries: A Competitive Analysis 
R-C129-07Symposium on Pension Funding Adequacy 
R-C130-07Reinventing Pension Actuarial Scienceformerly 8RU-255-04
R-C131-07Plan Freezes: The New Ice Age 
R-C132-0720 Questions Directors Should Ask About Their Role in Pension Governance 
R-C133-07Back to the Futureformerly 8RU-204-00
R-C134-07Chapters 3, 6 & 7 of Managing Investment Portfolios 
R-C135-07Thoughts on the Future: Life-Cycle Investing in Theory and Practice 

Canada Only    
RC-C05-07Retirement Benefits CSP Introductory Study Note 
RC-C13-07Retirement Benefits Case Study-CANADAformerly 8RC-13-06
R-C600-07FAQs About Actions Taken by OSFI in Connection with Air Canada's Pension Plans 
R-C601-07Canadian Pension Plan Design 
R-C602-07Funding Supplementary Pension Plans 
R-C603-07Retirement Compensation Arrangements: A Curmudgeonly Excursion 
R-C604-07Creative Compensation Arrangements for Private Corporations 
R-C605-07Asset Transfer Resulting From Sale of Business 
R-C606-07Guideline for Converting Plans from Defined Benefit to Defined Contribution? 
R-C607-07Filing Requirements and Procedure on Full or Partial Wind Up of a Pension Planformerly 8RC-116-01
R-C608-07PPPD Investment Policy Guideline 
R-C609-07Canadian Association of Pension Supervisory Authorities Guideline No. 3: Guidelines for Capital Accumulation Plans 
R-C610-07CIA Standards of Practice-General Standardsformerly 8RU-306-03
R-C611-07CIA Standards of Practice-Practice-Specific Standards for Pension Plans 
R-C612-07CIA Standards of Practice-Post-Employment Benefit Plans 
R-C613-07The Fair Value Method of Measuring Compensation for Employee Stock Options: Basic Principles and Illustrative Examples 

U.S. Only    
RU-C05-07Retirement Benefits CSP Introductory Study Note 
RU-C13-07Retirement Benefits Case Study-U.S.formerly 8RU-13-06
R-C800-07Airline Plans' Underfunding Illustrates Broader Problems with the Defined Benefit Pension System 
R-C801-07Evaluating Financing Options for Nonqualified Benefit Plans 
R-C802-07Executive Compensation and Benefits: Conducive, Elusive or Abusive? 
R-C803-07Executive Compensation 2005: Many Forces, One Direction 
R-C804-07The Brave New World of Equity-Based Compensation Post-409A 
R-C805-07Taking Stock of Option Expensing 
R-C806-07Chapter 5 of Retiree Group Benefits