Skills and Knowledge Inventories (SKI) Pension Area of Practice

November 2008

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2008 Canadian Institute of Actuaries

Skills and Knowledge Inventory - Pension

This document is intended to be a guideline and resource used only to assist members. This Skills and Knowledge Inventory (SKI) was developed by the SKI Task Force in the spring of 2007 support members Continuing Professional Development (CPD) programs. Although special emphasis was placed on technical matters, this SKI should not be construed as a definitive description of the competencies required of those practising in the Pension area. Similarly, familiarity with all of the information contained in this SKI is not a necessary condition to meet the CIAs CPD Qualification Standard. This document is not intended to be used by the CIA (e.g., the Committee on Professional Conduct or the Disciplinary Tribunal) or third parties as a standard by which the conduct of members is judged. As with all publications by the CIA, members are urged to use professional judgment in using and applying the document as circumstances may change and developments may occur. Table Ia Skills and Knowledge Subjects for Various Pension Practitioner Categories
A Benefits Consultant/ Consulting Actuary B Valuation Actuary (Signing) C Actuarial Valuation (Technical Support) D Practice Leader E Benefits and Pension Optional Values F Regulator G Social Security Plan Actuary

Skills and Knowledge Subjects

Actuarial Resources
1 2 Experience Studies (internal and industry) Standard Tables D D D D D D W W A A D D

Actuarial Techniques and Methods

3 4 5 6 7 8 9 10 11 12 ALM Asset Modelling Financial Economics M&A Replication Portfolios Selection of Methods and Assumptions Total or Partial Plan Wind-up W W W D W D D W W W W W W W W D D W A A W W W W W W W W W W A A A A A A A A A W W D D W A D

A A A D

A A A

Economic Environment
Annuities and Insurance Published Statistics Demographic/Economic Wage and Price Economics

13 14 15 16

Specialist Areas of Knowledge Funding Policies Plan Conversions SERPs and Designated Plans Statements of Investment Policies and Goals Tax and Legal Environment Accounting Standards Pension Benefit Standards Acts and Regulations Foreign Actuarial Standards of Practice Income Tax Act and Regulations Jurisprudence/Legal Environment Social Security Benefit law/Reg

D D D* D*

A D* D* A

D*

W W W W

D* D*

A A A A D

17 18 19 20 21 22

D D A D D A

D D A D D A

D* D

W W A D D A D D D D D W W D A

W W

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Skills and Knowledge Inventory - Pension

The letter in each box indicates the level of skills and knowledge of a member working in a given role. The level may vary from that indicated depending on the specific requirements of any practitioners role. The letter codes are defined as follows:

Table Ib Blank Box A W D D* Basic Knowledge and General Awareness Wide Knowledge Detailed Knowledge and Experience Detailed Knowledge and Experience No specific requirements identified for that subject. General awareness of the basic facts and also of the broad implications of the subject. Deep understanding of the subject area and its implications, as well as its potential interaction with other subjects. Ability to effectively apply the subject in practice, with detailed knowledge of the facts, and ability to adjust the approach based on circumstances, particularly for unusual situations. Same as D except it is needed only if a member accepts assignments in that area.

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Skills and Knowledge Inventory - Pension

Table II Additional Information Regarding Skills and Knowledge Subjects

Skills and Knowledge Specifics
1 2 3 4 5 6 7

Experience Studies: Constructing tables, comparing actual to expected, gain and loss analysis, statistical credibility. Standard Tables: Sources of data, construction techniques, projection method, common usage. (ALM) Asset Liability Management: Asset models, liability models, interpretation and presentation of results, methods for evaluating risk and possible loss. Asset Modeling: Asset models, interpretation of results, setting interest rate assumptions. Financial Economics: Basic theory, evaluating guarantees. Mergers and Acquisitions: Accounting impact of transaction, definition of purchase price adjustments. Replication Portfolios: Design, construction, available assets and products to defray risk. Selection of Methods and Assumptions: Market valuations, interrelationship of assumptions, selection of realistic assumptions, best estimate assumptions, margins and provisions for adverse deviations, method and assumptions appropriate to the purpose of valuation implications of experience studies, and gain and loss analyses. Total or Partial Wind-up: Trust implications; Regulator guidelines, Canadian Institute of Actuaries Standards and guidance, investment implications, disclosure requirements, accounting implications. Annuities and Insurance: Purchase of annuities, accounting implications, Assuris insurance, PBGF coverage, registered and non-registered, prescribed and nonprescribed. Locking-in rules and commutation rights. Published Statistics Demographic/Economic: Bond yields, investment returns, market indices, population mortality tables, Consumer Price Index, average wage index. Wage and Price Economics: Central bank policies and targets. Funding Policies: Development, application. Plan Conversions: Regulatory requirements, surplus implications, accounting applications, disclosure requirements, benefit projections. SERPs and Designated Plans: Valuation requirements, Regulatory requirements, accounting implications, taxation requirements. Statements of Investment Policies and Goals: Regulatory requirements, development and information that should be included. Accounting Standards: Canadian, US, UK, International, etc. calculations, disclosure requirements, differences in certification requirements. Convergence of standards. November 2008 Page 4 of 9

10

11

12 13 14 15 16

17

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18

Pension Benefits Standards Acts and Regulations: Funding Standards (going-concern and solvency), reporting requirements, minimum benefit Standards, disclosure Standards. Foreign Actuarial Standards of Practice: Practice Standards to be applied. Income Tax Act and Regulations: Maximum funding rules, reporting requirements, maximum benefit Standards, PAs, PSPAs and PARs. Jurisprudence/ Legal Environment: Marriage breakdown requirements, beneficiary rights, basic principles of trust law, rights to surplus, responsibility for deficits. Social Security Benefit Law/Regulation: Canada Pension Plan, Old Age Security, GIS, Provincial programs. Disability and death benefits.

19 20 21 22

Table III Additional Details Regarding Pension Practitioner Categories

Benefits Consultant/Consulting Actuary: Advice on benefit design and amendment, setting of assumptions, selection of funding methods, design and application of funding policy, compliance with Income Tax Act and federal and provincial standards. Interpretation of data, studies and valuation results and explanation thereof to sponsors and other stakeholders. Assessment of financial risk to sponsors and members and reporting of actuarial implications. Monitoring of changing standards and reporting requirements and assistance in compliance. Valuation Actuary (Signing): Planning, organizing, control and direction of experience studies, assumption-setting, valuation calculations, gain and loss analyses, development of recommendations and preparation of reports in accordance with legislative requirements and Canadian Institute of Actuaries Standards of Practice. Responding to questions and provision of explanations in respect of any or all of the aforementioned. Actuarial Valuation (Technical Support): Planning, organizing, control and direction of experience studies, assumption-setting, valuation calculations, gain and loss analyses, development of recommendations and preparation of reports in accordance with legislative requirements and Canadian Institute of Actuaries Standards of Practice. Practice Leader: Recruitment, training and management of benefit consultants, actuaries and actuarial support staff. Maintenance of quality standards and ensuring all actuarial work is performed in accordance with both legislative requirements and Canadian Institute of Actuaries Standards of Practice, including ensuring appropriate internal Peer Review of all actuarial work. Benefits and Pension Optional Values: Planning, organization, control and direction of calculation of benefit amounts and pension optional values. Ensuring all calculations are performed in accordance with legislative requirements and applicable jurisprudence and, where applicable, with Canadian Institute of Actuaries Standards of Practice. Regulator: Review of actuarial valuation reports and other reports received for compliance with legislative requirements, applicable jurisprudence and, where applicable, Canadian Institute of Actuaries Standards of Practice. Advice to governments on changes to legislative requirements and interpretation and explanation of same to sponsors, members, consultants and other advisors. Social Security Plan Actuary: Planning, organizing, control and direction of experience studies, assumption-setting, valuation calculations, demographic and financial projections, gain and loss analyses. Development of recommendations to governments with respect to benefit changes and funding policies. Preparation of reports in accordance with legislative requirements and Canadian Institute of Actuaries Standards of Practice. Responding to questions from Ministers and others, and provision of explanations in respect of any or all of the aforementioned. November 2008 Page 5 of 9

Skills and Knowledge Inventory - Pension

Members are reminded that they must decide for themselves whether the material presented in the reference list is relevant to his/her own development. In doing so, the member should consider that the list is meant to accommodate practitioners of various experience levels and with widely different development requirements. Since members are required to be familiar with the Standards of Practice applicable to the actuarial work they perform, the SOPs are not specifically included in the SKIs Reference List but a link to where they can be found on the CIA website is provided at the end of the Table below. Table IV Suggested Resources for Skills and Knowledge Subjects
Resources by Broad Category: Actuarial Resources (R); Actuarial Methods (M); Economic Environment (E); Tax/Legal Environment (T); Specialist Knowledge (S) General References: Mercer Handbook of Canadian Pension and Welfare Plans Lawrence E. Coward Standard Life Summary of Pension Legislation The Handbook of Canadian Pension and Benefit Plans (Twelfth Edition), 2002; G.M. Hall - Chapters 7, 9 and 10 Canadian Pensions and Retirement Income Planning (2001) - Chapters 2-21 R M M M M M M M M M M M M 2003 SOA Pension Plan Turnover Study (http://www.soa.org/research/pension/research-2003-soa-pension-plan-turnover-study.aspx) Notice of Intent regarding changes to the General Standards of Practice amendments to require independently reasonable assumptions (CIA Publication Accession Number 208003) N.B. Watch for further developments and new standards and guidance Revised Standards of Practice Practice-Specific Standards for Pension Plans Section 3600: Reporting: External User Report (CIA Publication Accession Number 207116) Research Paper Determination of Appropriate Provisions for Adverse Deviations in Hypothetical Wind-up and Solvency Valuations (CIA Publication Accession Number 207110) N.B. Look for subsequent Standard of Practice or Educational Note Educational Note: Guidance for 2007 Assumptions for Hypothetical Wind-up and Solvency Valuations with Effective Dates between December 31, 2006 and December 30, 2007 (CIA Publication Accession Number 207032) N.B. Look for updates each spring CIA Educational Note: Expenses in Funding Valuations for Pension Plans (CIA Publication Accession Number 207010) CIA Educational Note: Guidance on Asset Valuation Methods (CIA Publication Accession Number 207102) CIA Educational Note: Events Occurring After the Calculation Date of an Actuarial Opinion for a Pension Plan (CIA Publication Accession Number 207007) CIA Final: Standards of Practice General Standards CIA/CICA Joint Policy Statement Subsections 1620 and 1630 (CIA Publication Accession Number 207067) CIA Report: Financial Economics and Canadian Pension Valuation (CIA Publication Accession Number 206102) CIA Memorandum: Executive Summary Report on Financial Economics (CIA Publication Accession Number 206101) Educational Note: Pension Commuted Values (CIA Publication Accession Number 206042) Memorandum: Statement of Principles Regarding Selection of Independently Reasonable Assumptions (CIA Publication Accession Number 206011) November 2008 Page 6 of 9

Skills and Knowledge Inventory - Pension Resources by Broad Category: Actuarial Resources (R); Actuarial Methods (M); Economic Environment (E); Tax/Legal Environment (T); Specialist Knowledge (S) M M M M R E M R E E T T T T T T T T T T S S Educational Note: Applicability of Rules, Standards, and Other Guidance to CIA Members (CIA Publication Accession Number 205122) N.B. This note was prepared by the Task Force on IAA Insurance Standards, but the principles apply to members in all practice areas performing work in other jurisdictions. Consultation Paper: Issues Relating to Consistency of Assumptions Underlying Pension Value Standards (CIA Publication Accession Number 205065) Transactions of the Society of Actuaries: THE UP-94 AND GAR-94 TABLES: ISSUES IN CHOOSING THE APPROPRIATE TABLE (Paper) Actuarial Report (23rd) on the Canada Pension Plan: (Full Report) (Executive Summary)

External Review of the Actuarial Report (21st) on the Canada Pension Plan: (Actuarial Report) (Peer Review Report) (Review by UK Gov't Actuary's Dept) Report on Canadian Economic Statistics 1924-2007 (CIA Publication Accession Number 208040) (Tables) N.B. Updated annually Submission by the CIA Presented to the Committee on Social Affairs as part of the Consultation on Bill 30 An Act to Amend the Supplemental Pension Plans Act, Particularly with respect to the Funding and Administration of Pension Plans (CIA Publication Accession Number 206099) Submission of the CIA Presented to the House of Commons Standing Committee on Finance (CIA Publication Accession Number 206098) Submission from the CIA to the Department of Finance Solvency Funding Relief Regulations Canada Gazette, Part 1, June 10, 2006 (CIA Publication Accession Number 206090) Submission: Submission by the CIA Presented to the Department of Finance (Federal) Comments on the Consultation Paper: Strengthening the Legislative and Regulatory Framework for Defined Benefit Pension Plans Registered under the Pension Benefits Standards Act, 1985 (CIA Publication Accession Number 205063) Final Report: The Role of the Pension Actuary and Challenges to Professional Integrity (CIA Publication Accession Number 205118) Report: Feedback on the Statement of Principles for Revised Actuarial Standards of Practice for Reporting on Pension Plan Funding (CIA Publication Accession Number 205105) Statement of Principles on Revised Actuarial Standards of Practice for Reporting Pension Plan Funding (CIA Publication Accession Number 205012) Submission by the CIA on the Proposed Amendments to the Employment Pension Plans Regulation Statement (CIA Publication Accession Number 206012) Submission by the CIA to CAPSA - Comments on the Discussion Paper: Proposed Funding Principles for a Model Pension Law (CIA Publication Accession Number 205128) Submission: Submission by the CIA Presented to the Rgie des rentes du Qubec Comments on the Working Paper Towards a Better Funding of Defined Benefit Pension Plans (CIA Publication Accession Number 205099) Qubec Requirements for setting up, terminating and amending a pension plan or converting to a Simplified Pension Plan: http://www.rrq.gouv.qc.ca/en/professionnels/regime_retraite_cd_pd/ Qubec Matters Related to Simplified Pension Plans (SPP) in Qubec (http://www.rrq.gouv.qc.ca/en/professionnels/rrs/) November 2008 Page 7 of 9

Skills and Knowledge Inventory - Pension Resources by Broad Category: Actuarial Resources (R); Actuarial Methods (M); Economic Environment (E); Tax/Legal Environment (T); Specialist Knowledge (S) S S T T T T T T T T T T T T T T T T T T T T T T T Qubec Requirements and Rules Applicable to LIRAs and LIFs (http://www.rrq.gouv.qc.ca/en/professionnels/cri_frv/) Qubec Marriage Breakdown Procedures Partition of Benefits Under a Supplemental Pension Plan (http://www.rrq.gouv.qc.ca/en/professionnels/partage_droits/) Federal - Pension Benefits Standards Act http://laws.justice.gc.ca/en/P-7.01/index.html Federal - Pension Benefits Standards Regulations http://laws.justice.gc.ca/en/P-7.01/SOR-87-19/index.html Federal OSFI Guidance Notes http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?articleid=1679 Federal PBSA Updates http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?DetailID=224#pbsa Alberta - Act: http://www.qp.gov.ab.ca/Documents/acts/E08.CFM Alberta - Regulations: http://www.qp.gov.ab.ca/documents/Regs/2000_035.cfm?frm_isbn=0779718658 Alberta - EPPA Updates: http://www.finance.gov.ab.ca/publications/pensions/index.html#eppa British Columbia - Act: http://www.qp.gov.bc.ca/statreg/stat/P/96352_01.htm British Columbia - Regulation: http://www.qp.gov.bc.ca/statreg/reg/P/433_93.htm Manitoba - Act: http://web2.gov.mb.ca/laws/statutes/ccsm/p032e.php Manitoba - Regulation: http://web2.gov.mb.ca/laws/regs/pdf/p032-188.87r.pdf Manitoba - Updates: http://www.gov.mb.ca/labour/pension/publications/index.html New Brunswick - Act: http://www.gnb.ca/0062/acts/acts/p-05-1.htm New Brunswick - Regulation: http://www.gnb.ca/0062/regs/p-5-1reg.htm Newfoundland and Labrador - Act: http://assembly.nl.ca/Legislation/sr/statutes/p04-01.htm Newfoundland and Labrador - Regulation: http://assembly.nl.ca/Legislation/sr/regulations/rc969114.htm Nova Scotia - Act: http://www.gov.ns.ca/legislature/legc/statutes/pension.htm Nova Scotia - Regulation: http://www.gov.ns.ca/just/regulations/regs/pensionbenefits.htm Ontario - Act: http://www.search.e-laws.gov.on.ca/fr/isysquery/d1c4cd87-6b40-4e4e-9c5d-bfb3abcfd3cf/1/frame/?search=browseStatutes&context= Ontario - Regulation: http://www.search.e-laws.gov.on.ca/en/isysquery/1f3e04d3-a15e-4fac-bea7-ae28b6c58f7e/10/frame/?search=browseSource&context= Prince Edward Island Act not proclaimed at time of writing Qubec - Act: http://www.rrq.gouv.qc.ca/an/services/Publications/loi_rcr_cod_adm_a.pdf Qubec - Regulation: http://www.rrq.gouv.qc.ca/an/services/Publications/reglement_rcr_cod_adm_A.pdf November 2008 Page 8 of 9

Skills and Knowledge Inventory - Pension Resources by Broad Category: Actuarial Resources (R); Actuarial Methods (M); Economic Environment (E); Tax/Legal Environment (T); Specialist Knowledge (S) T T T Saskatchewan - Act: http://www.qp.gov.sk.ca/documents/English/Statutes/Statutes/P6-001.pdf Saskatchewan - Regulation: http://www.qp.gov.sk.ca/documents/English/Regulations/Regulations/P6-001R1.pdf Income Tax Act: http://laws.justice.gc.ca/en/I-3.3/ N.B. Partial list of relevant sections: General background 2 & 3; Employees point of view - 5, 6(1), 8(1), 56(1) & 60; Employers point of view - 9, 12(1), 18(1), 20(1) & relevant definitions in 248(1); Specialised sections - 144, 146, 147, 147.1, 147.2, 147.3, 147.4, 180.2, 204.1, 204.2, 207.5, 207.6 & 207.7. Income Tax Regulations: http://laws.justice.gc.ca/en/I-3.3/C.R.C.-c.945/index.html N.B. Partial list of relevant sections: 8300-8311, 8400-8410, 8500-8520 Income Tax Guides, Bulletins, etc.: (General) (Registered Plans) Rules for Actuaries and Auditors in the Use of Each Others Work: General Standards s.1630 (CIA Publication Accession Number 207080) Accounting Standards Governing Valuation of Pension Plans for GAAP Purposes: CICA Handbook Section 3461, Implementation Guide and Q&As (Obtain from Canadian Institute of Chartered Accountants, 277 Wellington Street W., Toronto, ON M5V 3H2, 1-800-268-3793, www.cica.ca) Financial Economics: With Applications to Investments, Insurance and Pensions editors Harry H. Panjer, Phelim P. Boyle, Samuel H. Cox, Hans U. Gerber, Heinz H. Mueller, Hal W. Pedersen, Stanley R. Pliska, Michael Sherris, Elias S. W. Shiu & Ken Seng Tan - published by the Actuarial Foundation Pension Actuary's Guide to FINANCIAL ECONOMICS - Joint AAA/SOA Task Force on Financial Economics and the Actuarial Model

T T S S S S

To assist the CE Committee in keeping the above reference list current and relevant to CIA Members, we encourage practitioners to share with the Committee any additional documents and references not included in the above list. Please contact the CE Committee at cpd.spotlight@actuaries.ca with this information.
Links to Pension SOPs: CIA Standards of Practice Practice-Specific Standards for Pension Plans, May 2006 (CIA Publication Accession Number 206036) Revised Standards of Practice Practice-Specific Standards for Pension Plans Section 3600: Reporting: External User Report, December 2007 (CIA Publication Accession Number 207116) Memorandum: Technical Amendments Practice-Specific Standards for Pension Plans, Part 3000 (CIA Publication Accession Number 206037)

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