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2008 Annual Meeting ● Assemblée annuelle 2008 Québec

Canadian Institute of Actuaries. L’Institut canadien des actuaires. 2008 Annual Meeting ● Assemblée annuelle 2008 Québec. Geoff Guy Chair, Actuarial Standards Board Rob Smithen Project Manager June 19, 2008. 2008 Annual Meeting Assemblée annuelle 2008.

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2008 Annual Meeting ● Assemblée annuelle 2008 Québec

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  1. Canadian Institute of Actuaries L’Institut canadien des actuaires 2008 Annual Meeting ●Assemblée annuelle 2008 Québec

  2. Geoff Guy Chair, Actuarial Standards Board Rob Smithen Project Manager June 19, 2008 2008 Annual Meeting Assemblée annuelle 2008 Commuted Value Standards

  3. Today’s agenda • A bit of history • The ASB’s role • The March 08 Notice of Intent (NOI) • What’s happened since March? • Exposure drafts June 08 • What’s next?

  4. History

  5. The ASB’s Role • Develop standards taking into account public interest (and other criteria) • Manage the process • Hear opinions • Make decisions

  6. Notice of Intent – March 08 • Key points: • Will publish two exposure drafts in June 2008 • Changes expected in: • Mortality • Long Term Interest and Inflation • Should there be a common standard between Pension and MB? • Hope to make decision by Oct 2008

  7. What’s been happening? Input from: Pension Practitioners Marriage Breakdown Practitioners 2004Task force ……………….and others

  8. And……….. • The ASB has considered the representations • Discussed possible approaches • Approved release of two exposure drafts

  9. Exposure Draft: Pensions • Market Based Approach • Mortality: UPI 1994 projected to 2025 • Interest Rate: • 2 tier structure: First 10 years, after ten years (Govt of Canada bonds plus 75 -100 b.p.) • Inflation: difference between non-indexed and RRR bonds minus 25 b.p • Time Lag: 2 months • Rounding: 0.1 %

  10. - Why 75 – 100 b.p.?(spread over Gov of Canada) • Credit Risk • Investment Expenses • Liquidity • Independent study suggested 75-120 bps • Current standard calls for 50 bps • Will need to decide specific addition by October

  11. Exposure Draft: MB • Replacement Value Approach • Mortality: UPI 1994 projected to 2025 • Interest Rate: • 3 tiers: first 5 yrs, next 15 or 20 years, (using Govt of Canada bonds plus 50 – 75 b.p.), 6% thereafter • Inflation: difference between non-indexed and RRR bonds minus 25 b.p. • Time Lag: 2 months • Rounding: 0.1 %

  12. Most things have changed = some change from current standards

  13. What’s next? • Exposure drafts by June 30 • MB meeting with ASB in July • Comment period to August 29 • ASB decision in September or October 2008 • Effective date of new standards February 2009 (with some opportunities for early implementation)

  14. Comments welcomedPossible topics!! • The 75-100 b.p addition to Gov of Canada bonds (pensions) • The 50-75 b.p. addition to Gov of Canada bonds (MB) • 20 or 25 yrs for MB variable rate? • Improvements in mortality – generational tables coming? • The 25 b.p adjustment to inflation • MB practitioners have significant reservations • A common basis? Rationale for any differences • Values too high/too low • ………………….etc

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