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Sep2019_Q2_Pii

A

a.begdai

Keen member
Part ii is asking the response which the employer's actuary should make to the Scheme's actuary.

"Do nothing" is one of possible actions prescribed in the Part i (by the scheme actuary), but does it not fit Part ii better. Because the sponsor's actuary will probably want to remain status quo for the time being and wait for the market to improve, whereas the scheme actuary and the trustees (whose primary motive is to ensure benefit security) will prefer to take some action to improve the funding position.

It can be argued that the point fits in either of the two scenarios. So, want to check the appropriateness of using it in part ii rather than part i?

Thanks
 
Hi

I think 'do nothing' could be considered in both part (i) and (ii). In each case, I would want to talk about what might make this appropriate. So, for example, in part (ii), the employer might think this were appropriate if:
- proposed changes in the valuation assumptions are open to challenge
- it is believed that the reduction in the funding level is likely only to be temporary
- the valuation can be considered to be a snapshot at a point in time and the results are expected to be variable.

I think each of these ideas or arguments can be found in the Examiners' Report (and in ASET) and so would have gained credit.

I hope that helps.
 
Thank you Gresham.
Gresham Arnold said:
Hi

I think 'do nothing' could be considered in both part (i) and (ii). In each case, I would want to talk about what might make this appropriate. So, for example, in part (ii), the employer might think this were appropriate if:
- proposed changes in the valuation assumptions are open to challenge
- it is believed that the reduction in the funding level is likely only to be temporary
- the valuation can be considered to be a snapshot at a point in time and the results are expected to be variable.

I think each of these ideas or arguments can be found in the Examiners' Report (and in ASET) and so would have gained credit.

I hope that helps.
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