The social security institution ensures the availability of sufficient and reliable data necessary to perform actuarial work. The social security institution is responsible for the management of the data pertaining to the social security scheme participants and provisions, and compliance with data privacy legislation and national standards. The actuary provides an opinion on sufficiency and reliability of data, describes any modification made to data and the impacts of imperfect data on the social security scheme and its participants, and makes recommendations for improving the quality of data.
Sufficient and reliable data are an essential element necessary for performing any type of actuarial work. Data requirements depend on the type of work undertaken, the benefit structure of the social security scheme (including benefit design and financing structure), the nature and objective of the actuarial analysis, reporting requirements, and any regulatory or legal requirements concerning the analysis or reporting.
Actuarial work assessing the financial sustainability of a social security scheme requires up-to-date data specific to the assessed scheme as well as general demographic and macroeconomic data necessary to set the demographic and macroeconomic framework for the actuarial work. The data that enables valuations to be performed include current beneficiary and contributor data and information on current and past system rules, as well as any planned or contemplated future changes in these rules (e.g. benefit formula, basic benefit package, eligibility for benefits and contribution basis). Data on past experience (e.g. inflation, salary increases, rate of return on investments, mortality and morbidity rates, retirement rates, in-patient/out-patient visits, frequencies and unit costs) should be taken into account by the actuary in developing appropriate assumptions about the future.
The data available for actuarial work should respect sufficiency and reliability criteria. Sufficiency means that data should enable an actuary:
- To develop appropriate demographic and economic assumptions to project and, where applicable, discount future cash flows of the social security scheme;
- To perform the required actuarial calculations;
- To validate and develop valuation and calculation methodologies;
- To analyse past demographic, financial and investment experience of the social security scheme so as to enable comparison of outcomes with social objectives and reconciliation of emerging experience with actuarial assumptions;
- To perform any other type of actuarial work deemed necessary by an actuary or by the social security institution.
Reliability means that data should be:
- Up to date;
- Internally consistent;
- A sufficiently long series of the past;
- Consistent with data from other sources.
This guideline should be read in conjunction with ISSA Guidelines on Information and Communication Technology, in particular its Section A.5, Data and Information Management.