Industry News

Recently, the Actuarial Standards Board (ASB) approved a revised version of Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. The ASB provides standards and guidance for a broad range of actuarial practices through a series of ASOPs, including those related to pension and retiree group benefit obligations. 

ASOP No. 4 provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a defined benefit pension plan and determining periodic costs or actuarially determined contributions for such plans. The ASOP revisions to the version adopted in December 2013 expand the scope to clarify the application of the standard when the actuary selects an output smoothing method and when an assumption or method is not selected by the actuary. The revisions include a number of technical items relating to funding calculations and related disclosures.

In addition, a requirement was added to calculate and disclose a reasonable actuarially determined contribution and “Low-Default-Risk Obligation Measure” (LDROM), which is the value of liabilities using an interest rate derived from low-default-risk fixed income securities. The LDROM was added to provide guidance regarding the calculation of this measure when the actuary is performing a pension plan actuarial valuation.

The revised standard is effective for any actuarial report issued on or after February 15, 2023; and if the measurement date in the actuarial report is on or after February 15, 2023. 

An overview of the changes and full ASOP No. 4 are available here.