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CV – John Anderson
B.Com (Hons), FFA, FASSA National Head of Consulting Strategy at Alexander
Forbes Financial Services Member of the Research Committee of the Actuarial
Society of South Africa Principal Consultant to a number of clients in
the Western Cape, Eastern Cape, Gauteng Valuator to a number of clients in the Western Cape,
Eastern Cape 8 Years Industry Experience
An Actuary’s Duties in the Pension Fund
Environment
John Anderson ‐Alexander Forbes Financial Services
AgendaThe Legislative & Regulatory Environment
Professional Bodies
Good Practice & the Actuary’s Role in a Fund
Mechanisms for Resolving Disagreements
Important to Remember...
The Future is Uncertain
& Assumptions are Made....
Actuaries therefore
need to apply DISCRETION!
Actuaries apply their discretion taking into account...
The Legislative & Regulatory Environment
The Law and Regulatory Requirements
The Law and Regulatory Requirements
Pension Funds Act (Relevant Sections)
Section 14 (& Directive 2)
Section 14A & Section 14B
Section 15 (& Directive 3)
Section 28Regulation 15 (Replaced by
BN 149 of 2010)
Regulation 2
Regulation 28
The Law and Regulatory Requirements
The Law and Regulatory Requirements:Other Relevant Legislation
Professional Bodies
Professional Bodies
Actuarial Society of South Africa /Institute and Faculty of Actuaries
Codes of Conduct
Codes of Values
Guidance Notes
Professional Bodies Codes of Conduct
Capabilities (the ability to)
Reliable and usefulness of actuarial methods
Minimum conduct set out in Code of Conduct (RULES!!!)
Enforced through ASSA’s educational programme and life long learning activities
Violation of Code of Conduct
Professional Bodies Codes of Values
Values / Principles (the commitment to)
Guiding behaviour in grey areas where conduct cannot be defined
Statement of Values established to develop appropriate values Honesty / Impartiality / Integrity / Professional Respect
Clear, appropriate & effective communication
Corner stone – serving public interest
Not formally enforced due to inspirational nature
Professional Bodies
Guidance Notes
Mandatory and advisory
Some more relevant than other
Classification!
Use as checklist?
Keep up‐to‐date
Retirement Matters Committee
Professional Bodies
SA specific Guidance Notes
PGN 201 : Valuation reports (Mandatory)
(PGN 202: Approval of investment strategy – long awaited)
PGN 203 : DC Valuation exemption (Mandatory)
PGN 204 : Actuarial discretion (Best practice)
PGN 205 : Communication to members of defined contribution retirement funds –
Withdrawn, but refer to GN34
PGN 206 : AIDS and Retirement Funding (Advisory)
PGN 207 : Accounting for Retirement Benefits (Best practice)
PGN 208 : Costing of past surplus utilised improperly (Mandatory)
Good Practice & the Actuary’s Role in a Fund
Important Principles for Good Practice
Good Practice & the Actuary’s Role in a Fund
Actuaries are responsible for Valuations in Funds
Reasonability & Consistency of Data
Assumptions & Actuarial Methods
Reasonability of Results
Good Practice & the Actuary’s Role in a Fund
Actuaries also calculate Transfer Values
Reasonability & Consistency of Data
REMEMBER →REASONABILITY ≈ f(reference point, market, expectation)
Good Practice & the Actuary’s Role in a Fund
Actuaries calculate Surplus
Remember that Surplus is Historical in Nature
There are Few Reference Points
It is Hard to Verify
Actuary has to apply discretion where Data is unreasonable
Creation of Contingency Reserves
Mechanisms for Resolving Disagreements
Mechanisms to address disagreements Subcommittee should be called together
Equipped with fit and proper trustees (eq. FD’s, COO’s, etc)
Board should engage the actuaryShould not get to a point of disagreement
Independent Actuary / 2nd opinionPeer reviews
Lastly, revert to professional body
Concluding Remarks Be aware of possible problematic areas
Try to anticipate them
Stick to good principles
Use the guidance from professional bodies
Use the “best” practice provided by regulators
Be prepared to learn / look overseas
Thank You & Questions