Session from the 2012 CCA Annual Meeting
10/22/2012 - 2:15 – 3:30 PM
Session Category: Public Plans - General
Credits: EA Core 1.50 CPD 1.50
"In a public retirement system, the people are represented by two separate, yet equally important groups. The plan sponsor who establishes and funds the plan and the retirement system who invests the assets and administers the plan. These are their stories."
- In today's challenging economic climate, funding retirement plans is one of the greatest financial challenges, as well as one of the most significant budget issues for plan sponsors. As a result, it is not uncommon for plan sponsors (cities, states, municipalities, etc.) to hire their own actuary (or "hired gun") to provide advice, recommendations, findings, etc. that are consistent with the plans sponsor's financial constraints.
- The retirement system's retained actuary, on the other hand, generally tries to provide advice, recommendations, findings, etc. that are consistent with the system's ultimate goal of sound funding.
Given the possibly divergent goals of their principals, it is entirely possible that the recommendations of these two sets of actuaries will be different even though the basic data and circumstance are the same.
The speakers at this session explore the challenges and conflicts that public plan actuaries may face in serving their principals while also complying with both the Code of Conduct and ASOPs, including the following:
- Do the Code and the ASOPs provide sufficient guidance and support to the actuaries providing different recommendations?
- What other factors and consequences should public plan actuaries consider before taking a “hired gun” assignment?
- Does this situation create “reputational risk” for the actuarial profession, since dueling actuaries encourages the perception that actuaries are just “answers for hire.”