2008 annual meeting assembl e annuelle 2008 qu bec
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2008 Annual Meeting ● Assemblée annuelle 2008 Québec

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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 assembl e annuelle 2008 qu bec

Canadian

Institute

of

Actuaries

L’Institut canadien

des

actuaires

2008 Annual Meeting ●Assemblée annuelle 2008

Québec

commuted value standards
Geoff Guy

Chair, Actuarial Standards Board

Rob Smithen

Project Manager

June 19, 2008

2008 Annual Meeting

Assemblée annuelle 2008

Commuted Value Standards
today s agenda
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?
the asb s role
The ASB’s Role
  • Develop standards taking into account public interest (and other criteria)
  • Manage the process
  • Hear opinions
  • Make decisions
notice of intent march 08
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
what s been happening
What’s been happening?

Input from:

Pension Practitioners

Marriage Breakdown Practitioners

2004Task force

……………….and others

slide8
And………..
  • The ASB has considered the representations
  • Discussed possible approaches
  • Approved release of two exposure drafts
exposure draft pensions
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 %
why 75 100 b p spread over gov of canada
- 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
exposure draft mb
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 %
most things have changed
Most things have changed

= some change from current standards

what s next
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)
comments welcomed possible topics
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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