These Guidelines are written for actuaries and other social security professionals undertaking actuarial work for social security schemes, as well as social security institutions, policy-makers and other stakeholders overseeing or reviewing actuarial work.
The objectives of the Guidelines are to provide guidance to these different stakeholders in their work as it relates to the planning, management, financing and provision of social security benefits. The Guidelines are structured to provide a list of issues to consider and recommendations in the carrying out of these duties. These duties will vary according to the stakeholder concerned and may include performing actuarial calculations, providing or formulating policy advice, supervision, reporting, management and communication.
The main objectives are therefore to:
This document provides a series of recommendations regarding the principles, structures and processes that should be put in place and undertaken to meet the objectives referred to above. It therefore seeks to assist actuaries in their efforts to meet international and national standards as well as regulatory requirements. However, the ISSA-ILO Actuarial Guidelines are not legally binding; they should be considered as identifying and detailing good practice in respect of the wider objective of improving the carrying out and monitoring of actuarial work.
It should also be noted that it is not the goal of the guidelines to duplicate or replace the International Standards of Actuarial Practice (ISAPs) of the International Actuarial Association (IAA), in particular No. 2 (ISAP 2), Financial Analysis of Social Security Programs, or any relevant national actuarial standards. Rather it is to assure that social security institutions provide actuaries and other social security professionals performing actuarial work with the tools necessary for compliance with ISAP 2 as well as other good practices in relation to social security actuarial work.
The ISSA-ILO Actuarial Guidelines seek to provide support for actuarial work carried out in the areas considered as traditional actuarial domains as well as in other areas where actuarial involvement is either widespread or recommended.
In this context, actuarial work for the purpose of these guidelines therefore includes:
- Actuarial activities such as preparing actuarial valuations of social security systems; work related to national accounts and national and/or international accounting reporting; assessing sustainability impacts of proposed changes; and performing actuarial calculations necessary for determination of benefit entitlements and funding measures. These tasks may include calculations of liabilities, projection of cash flows and determination of various actuarial factors and legislation or other regulations that often require these tasks to be carried out by qualified actuaries;
- Actuarial input in areas such as investment management, policy development, risk management, communication, governance, considering impact on individuals and evaluation of fairness and equity between cohorts and other groups where actuarial skills and competencies can add value to the social security institution or governing body.
- Promote good practice in relation to actuarial work undertaken by, and for, social security institutions and to support efforts to improve accuracy, consistency and comparability of actuarial work;
- Provide guidance for the procedures carried out by actuaries in their work;
- Facilitate the work of institutions in their governance procedures relating to actuarial work;
- Improve the efficiency of actuarial procedures;
- Provide practical assistance to institutions to facilitate their compliance with actuarial standards;
- Provide guidance to individuals or bodies responsible for policy issues and regulation on actuarial involvement.
Unless specified otherwise, an actuary for the purpose of these guidelines means:
While these guidelines seek to provide support to both actuaries and non-actuaries involved in actuarial work, it is important for social security institutions to promote development of the national actuarial profession and to acknowledge the value of a recognized actuarial qualification and continuing professional development (see Guideline 54). Furthermore, even if each country may set their own requirements regarding qualifications, experience and competencies for professionals carrying out the actuarial work referred to in this document (and whether they are considered a “fit and proper” person to carry out the tasks assigned), these guidelines encourage those supervising actuarial work to set qualification requirements recognizing the importance of the actuarial profession. The regulators and supervising authorities should consider qualifications specific to the social security scheme when defining competencies required for carrying out actuarial work. The guidelines also encourage those carrying out actuarial work to comply with qualification requirements, undertake continuing professional development and adopt behaviours consistent with the minimum code of conduct of the IAA or that of the actuarial association of which the actuary is a member.
Part H and the associated supporting material provide more details.
Legislation, regulation and/or internal rules and governance procedures are likely to influence the areas of actuarial involvement and the competence, qualifications and professionalism required to carry out the work.
These guidelines cover the four situations where actuaries may be involved and/or where actuarial work is undertaken in respect of social security:
- Work which must (according to regulation or other legal instruments) be carried out by a recognized and qualified actuary;
- Work where the involvement of actuaries is important and actuaries are likely to play the principal role;
- Work where actuarial involvement and input is desirable;
- Work which requires actuarial techniques to be applied but in reality may be carried out by non-actuaries.
- An actuary employed directly by a social security institution as well as a consulting actuary who provides reports, advice or other input to institutions on a contractual basis and who has a recognized actuarial qualification at the national or international level (reference should be made to Guideline 52); or
- A professional without a recognized actuarial qualification (e.g. statisticians and economists) who carries out actuarial work. These guidelines recognize that in some situations, various professionals other than actuaries may be involved in performing actuarial work. However, it is important that social security professionals without actuarial affiliation involved in providing actuarial services to social security institutions possess relevant qualifications and follow relevant rules of professional conduct as described in Guideline 52.
The social security institution should determine for their own situation which elements of work fall under which of the four categories above. This should be properly documented and regularly reviewed. The decision will depend on a number of different factors both internal to the institution and external. These may include (but not be limited to):
As actuaries are becoming involved more widely in different aspects of social security institution management, there is increasing need for greater coordination and consultation with other professionals and stakeholders. These guidelines set out, for the different areas of involvement, where such coordination should be undertaken and, where necessary, formalized. Where the actuary is external to the organization, it is especially important that appropriate procedures should be put in place and followed to ensure that efficient and effective coordination is carried out.
The social security institution and supervising authorities should seek to ensure and maintain the independence of the actuary. In practice, this means ensuring that the actuary has sufficient access to data, has choice over the most appropriate methodology and set of assumptions to use, and is not unduly influenced by external considerations or subject to internal pressure that may have an impact on results and recommendations. Supporting regulations and legislation should exist to secure this independence of function, as well as procedures to undertake where the independence is, or may be, compromised. More information is provided in Guideline 50.
- The regulatory and supervisory framework concerning the work in question;
- The materiality of the work undertaken, i.e. the impact it may have on the financial situation of the institution and/or the social security scheme;
- The actuarial resources and peer review processes existing within the institution;
- The development and resources of the national actuarial professional body;
- External (to the institution) actuarial resources available;
- Other professional resources available.