Froogle | ASOP 4 | Section 1

This actuarial standard of practice (ASOP or standard) provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a defined benefit pension plan (also referred to as “plan” or “pension plan” throughout this standard) and determining periodic costs or actuarially determined contributions for such plans. Other actuarial standards of practice address assumptions, asset valuation methods, and assessment of risk. This standard addresses broader measurement issues, including cost allocation procedures and contribution allocation procedures. This standard provides guidance for coordinating and integrating all of the elements of an actuarial valuation of a pension plan.

ASOP 4 | §1.2 | SCOPE

This standard applies to actuaries when performing actuarial services with respect to the following tasks in connection with a pension plan:

a. measurement of pension obligations, such as determinations of funded status, assessments of solvency upon plan termination, market measurements, and measurements for use in pricing benefit provisions;

b. assignment of the value of pension obligations to time periods, such as actuarially determined contributions, periodic costs, and actuarially determined contribution or periodic cost estimates for potential plan changes;

c. development of a cost allocation procedure used to determine periodic costs for a plan;

d. development of a contribution allocation procedure used to determine actuarially determined contributions for a plan;

e. determination of the types and levels of benefits supportable by specified cost or contribution levels; and

f. projection of pension obligations, periodic costs or actuarially determined contributions, and other related measurements, such as cash flow projections and projections of a plan’s funded status.

Throughout this standard, any reference to selecting assumptions, actuarial cost methods, asset valuation methods, amortization methods, and output smoothing methods also includes giving advice on selecting assumptions, actuarial cost methods, asset valuation methods, amortization methods, and output smoothing methods. In addition, any reference to developing or modifying a cost allocation procedure or contribution allocation procedure includes giving advice on developing or modifying a cost allocation procedure or contribution allocation procedure.

ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations, and ASOP No. 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations, provide guidance concerning assumptions. ASOP No. 44, Selection and Use of Asset Valuation Methods for Pension Valuations, provides guidance concerning asset valuation methods. In the event of a conflict between the guidance provided in this ASOP and the guidance in any of the aforementioned ASOPs, this standard governs.

This standard does not apply to actuaries when performing services with respect to individual benefit calculations, individual benefit statement estimates, annuity pricing, nondiscrimination testing, and social insurance programs as described in section 1.2, Scope, of ASOP No. 32, Social Insurance (unless an ASOP on social insurance explicitly calls for application of this standard).

As discussed in ASOP No. 41, Actuarial Communications, an assumption or method may be selected by the actuary or selected by another party. Nothing in this standard is intended to require the actuary to select an assumption or method that has otherwise been selected by another party. When performing actuarial services using an assumption or method not selected by the actuary, the guidance in section 3 and section 4 concerning assessment and disclosure applies.

This standard does not require the actuary to evaluate the ability or willingness of the plan sponsor or other contributing entity to make contributions to the plan when due. If a conflict exists between this standard and applicable law (statutes, regulations, and other legally binding authority), the actuary should comply with applicable law. If the actuary departs from the guidance set forth in this standard in order to comply with applicable law or for any other reason the actuary deems appropriate, the actuary should refer to section 4.

ASOP 4 | §1.3 | CROSS REFERENCES

When this standard refers to the provisions of other documents, the reference includes the referenced documents as they may be amended or restated in the future, and any successor to them, by whatever name called. If any amended or restated document differs materially from the originally referenced document, the actuary should consider the guidance in this standard to the extent it is applicable and appropriate.

ASOP 4 | §1.4 | EFFECTIVE DATE

This standard is effective for any actuarial report that meets the following criteria:

(a) the actuarial report is issued on or after February 15, 2023; and

(b) the measurement date in the actuarial report is on or after February 15, 2023.