Where circumstances warrant, the actuary may use approximations or estimates in performing the actuarial services. The following are some examples of such circumstances:
a. situations in which the actuary reasonably expects the results to be substantially the same as the results of detailed calculations;
b. situations in which the actuary’s assignment requires informal or rough estimates; and
c. situations in which the actuary reasonably expects the amounts being approximated or estimated to represent only a minor part of the overall pension obligation, periodic cost, or actuarially determined contribution.
When using approximations or estimates, the actuary should useprofessional judgment to establish a balance between the degree of refinement of methodology and whether the impact on the results is material.
Congratulations! You're now Froogled Up™ on Section 3.25 from ASOP 4!
Feel free to use it throughout your financial/insurance life.
