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SOA CPD Requirement

SOA CPD Requirement

By Emily K. Kessler

The SOA Board released the Continuing Professional Development (CPD) Requirement in exposure draft form in November 2007. Over 100 members sent comments to the SOA, and as a result of member comments, the Board made modifications to the CPD Requirement at its June meeting. This article discusses what changes were made, how the final CPD Requirement works, and how it relates to other actuarial qualification standards.

The final SOA CPD Requirement was released in July 2008. The final provision contains several key changes from the exposure draft (released in November 2007). We'll review key provisions in the SOA CPD Requirement, discuss key changes between the exposure draft and final requirement, and give you an overview of how the SOA CPD Requirement dovetails with other key qualification standards.

Your Board of Directors made the decision to set a continuing professional development requirement at its March 2007 meeting. The proposed CPD Requirement was released to members in exposure draft format in November 2007. The Board would like to thank the 100–plus members who took time to send in their questions, comments, compliments and concerns. At its June 2008 meeting, the Board made several major changes to the CPD Requirement:

  • The requirement to use the term Inactive or Emeritus with your SOA credential if you did not comply with the SOA CPD Requirement was eliminated. The member directory will be updated to show a member's SOA Continuing Professional Development Requirement status as either Compliant or Non–compliant. Members who are eligible for dues waiver due to retirement status will be shown as Retired. Retired members who elect to comply with the CPD Requirement will be shown as Compliant.
  • The SOA policy will be changed so that members are no longer able to opt out of appearing in the member directory; all members' names, credentials and SOA Continuing Professional Development Requirement status will be shown in the member directory.
  • The definition of structured credit has been changed to include listening to audio recordings, viewing video recordings or reading transcripts of events as structured credit. This was done to respond to cost concerns for members and concerns about the difficulty of obtaining structured credit outside of North America. We also heard concerns from members about the ability to easily obtain professionalism credit as structured credit, particularly from members outside of North America. By including audio recordings, video recordings and reading transcripts as structured credit, all members should be able to easily obtain structured professionalism credit at low cost.
  • We added the Faculty & Institute of Actuaries' CPD scheme (UK) and the Institute of Actuaries of Australia's CPD Requirement as methods of alternative compliance. These schemes were chosen because we grant mutual recognition for the FSA credential with those organizations.

What You Need To Know

We believe this is the first time in the SOA's history that our credential has been subject to a CPD requirement. Your Board of Directors made this decision based on several factors. The Board determined that a CPD requirement would help the SOA achieve its strategic vision–for actuaries to be recognized as the leading professionals in the modeling and management of financial risk and contingent events. A key aspect of this vision is ensuring that members maintain a level of knowledge comparable to the day they received their credentials. Many factors shaped the Board's decision. For example, one finding of the March 2004 Morris Review in the United Kingdom was that actuaries weren't staying current on advances in fields that affect their work. Partly as a result of the Morris Review, at the September 2006 North American Actuarial Council (NAAC) meeting, leaders of all the North American actuarial associations pledged consistent mandatory CPD requirements for their members. Shortly thereafter, the December 2006 Critical Review of the U.S. Actuarial Profession (CRUSAP) report, written as a result of the Morris Review, recommended that actuarial organizations define the purpose and scope of professional development for their members. All of these factors played a part in the Board's decision to formalize the SOA's CPD Requirements.

What Does the CPD Requirement Mean?

There are two ways for members to meet the CPD Requirement. You can comply with the provisions of the Requirement as written, or you can use one of the alternative compliance methods. All members must certify compliance annually, starting year–end 2010. We'll announce more details about how you'll certify compliance over the next year, but it will likely be as simple as going to a Web site and clicking a few buttons. What you need to know is you'll need to start to earn credits, or make sure you're meeting one of the alternative compliance standards, starting in 2009. All members are subject to the SOA CPD Requirement, whether you're an ASA, CERA or FSA.

The basic requirement is that you earn 60 units of credit over a two–year period. A unit is defined as 50 minutes, and you can convert hours to units at a rate of 1.2 units per hour (so a 1.5 hour course = 1.8 units). If you follow the basic requirement, you need to earn at least 75 percent of your credits (45 units) in job relevant topics, and at least three of those job relevant credits must be as structured professionalism credit. Structured credit can be earned from an organized activity (e.g., webcast, meeting, seminar), online course or audio or video recording or transcript of a live event. At least half your credits (30 units) must be from structured credits, and of those 30 units of structured credit, at least 7.5 must be from a source other than your employer. The rest of your credit can be earned through self–study (e.g., reading). You also have the option of earning up to one–quarter of your credits–15 units–in business and management courses. ASAs and CERAs pursuing their FSA earn structured credit for taking exams and completing e–Learning courses. Members can also earn structured and self–study credit by volunteering for an actuarial organization.

Many SOA members are already subject to other CPD standards. Members who are already subject to one of these other requirements can elect to comply with the SOA CPD Requirement by complying with:

  • the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States (U.S. Qualification Standard)
  • the Canadian Institute of Actuaries Qualification Standard–Continuing Professional Development (CIA Qualification Standard)
  • Category 1 or 2 of the CPD Scheme of Faculty & Institute of Actuaries (UK CPD scheme)
  • the Continuing Professional Development Standard of the Institute of Actuaries of Australia (IAAust CPD Standard).

We recognize there are differences between the standards–for example, the U.S. Qualification Standard only requires six units per year of organized activities, while the SOA CPD Requirement requires 15. Members don't need to worry about differences between the standards; you can use the other standard to comply in full, even if there are differences between the two standards. However, one fact is clear. If you are exempt from complying with the Requirement for some reason–e.g., under the Canadian standard you're exempt from compliance if you are not providing actuarial services–then you must elect to comply in full or you must comply with the basic Requirement. In other words, every SOA member must complete continuing education; you have some discretion as to how you do it, based on what CPD standards you are subject to, but you don't have the option not to complete and document continuing education.

What if you didn't get a chance to finish your CPD Requirements by year end? Not to worry–you can earn credits the following year and apply them to the prior CPD cycle. Members will certify as of the end of each year, starting at year–end 2010, that they have complied with the Requirement. You can comply by following a combination of the basic Requirement and the alternative compliance. In most cases, we expect members will follow an alternative standard, but we know in some cases members might move or change jobs which might change which requirements they are subject to.

Members must keep records of how they met the CPD Requirement (the basic Requirement or the elected alternative compliance standard). We will audit a small subset of members each year; if you are selected for an audit, you'll have to provide a copy of your documentation. That's all. We don't require that you keep handouts or certificates of attendance. There are many tools members can use to track their CPD–the American Academy of Actuaries, Conference of Consulting Actuaries and Canadian Institute of Actuaries each have a tool for members to use.

What If You Don't Comply?

Members have the option of not complying with the CPD Requirement. But, it's important for users of our services to know whether we've complied–our public wants to ensure that we keep up–to–date with professional education. We will be disclosing your compliance status in the member directory. We will add a category called SOA Continuing Professional Development Requirement and your status will be listed as Compliant or Non–compliant (different disclosure will apply to retirees–see sidebar). We'll be providing more details on exactly how compliance will work over the next year as we update our systems.

We hope compliance with the CPD standard won't be an undue burden for members. Most of our members already do plenty of continuing education, much in excess of 60 units every two years. The burden for most members will be record keeping, but there are many widely available tools to help you track your compliance.

Emily K. Kessler, FSA, EA, MAAA, FCA, is senior fellow, Intellectual Capital, for the Society of Actuaries. She can be reached at ekessler@soa.org.

Sidebar: Does the CPD Requirement Affect Retirees?

If you are eligible for reduced membership dues for reasons due to retirement, the CPD Requirement affects you differently. All members, including retirees, are subject to the CPD Requirement, but we know members of the public aren't relying on our retirees for their actuarial expertise. Retired members may elect to comply with the CPD Requirement; we know that many members who volunteer for the profession and stay up–to–date on recent developments could easily meet it.

If you elect to comply, and notify us that you've completed the Requirement, then the membership directory will show your CPD status as Compliant. If, however, you don't elect to comply, the membership directory will show your status as Retired. Your status in the membership directory will never be shown as Non–compliant.