2008 General Meeting Assemblée générale 2008 Toronto, Ontario 2008 General Meeting Assemblée générale 2008 Toronto, Ontario Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires

2008 General Meeting Assemblée générale General Meeting Assemblée générale Notice of Intent Issued: September 3, 2008 Comment deadline: November 14, 2008 Covers: SOP Section 3000 Except Commuted Values Draft Standards are appended Generally consistent with PPFRC Working Document of March 2007 Actuarial Standards Board – Pension Specific Standards

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Role of Actuarial Standards re: Funding Determination of minimum/maximum contributions per legal requirements Advice regarding alternative funding levels per terms of engagement Required disclosures regarding funded status and associated risks

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Enhanced Disclosures (External User Report) Required in all reports, unless wind-up benefit are not defined or a designated plan covering only “connected” persons Hypothetical wind-up funded status under a maximum cost scenario (currently required) Hypothetical wind-up or solvency valuation simplified gain/loss Hypothetical wind-up or solvency service cost Risk analysis

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Going Concern Valuations May be required by terms of engagement or by law (as currently required for registered plans) but not by SOP Assumptions, best estimate or including margins for adverse deviations (MFAD) Separate General SOP project likely to require “Independently Reasonable Assumptions” before Pension SOP is concluded Discount rates may reflect expected return on pension fund assets but CIA guidance on maximum discount rates is contemplated

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Going Concern Valuations (Continued) MFADs may not be required depending on circumstances The extent of MFAD in each significant assumption is to be disclosed Smoothed asset values permitted but disclosure of funded status using market value required Concept of consistency between asset valuation method and discount rate is removed

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Draft SOP Contents 3200Advice on the Financial Condition, Financial Position, Funded Status or Funding of a Pension Plan includes going concern, hypothetical wind-up and solvency valuations includes external user reporting requirements 3300Full or Partial Wind-up of a Registered Plan 3400Accounting for Pension Costs Substantial re-organization from current SOP, a cross reference table is provided

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Other Draft SOP Changes Circumstances of the Work Whether advice relates to the financial condition, financial position, funded status, funding or a combination thereof The terms of engagement (may include a formal or informal funding policy) The law The objectives of funding (if the work is related to funding)

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Other Draft SOP Changes Objectives of Funding Primary: systematic accumulation of dedicated assets (security) Other: may be specified by terms of engagement e.g. orderly and rational allocation, inter generational equity

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Other Draft SOP Changes Actuarial Cost Methods Not restricted to going concern valuations Limitation that forecast method not to be used for registered plan valuations is eliminated Specification that forecast period sufficiently long that the “valuation reflect the long term cost allocation pattern” is eliminated Specific requirement to include salary projection for final average plans is eliminated

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Other Draft SOP Changes Terminology Definition of funded status is introduced relative to going concern valuation difference between value of assets, and actuarial present value of projected benefits allocated to periods up to the calculation date No reference to “liabilities” which are reflected in a statement of “financial position” The actuarial present value of projected benefits allocated to periods up to the calculation date is more in the nature of a “funding target” than a “liability”

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Other Draft SOP Changes Hypothetical Wind-up Valuations Assets valued at Market Value vs. Liquidation Value for actual wind-up Explicit assumption for expenses is required Details on postulation of scenarios, recognition of contingent benefits, disregard of extremely unlikely scenarios

2008 General Meeting Assemblée générale General Meeting Assemblée générale Other Draft SOP Changes Actual Wind-up Valuations Contemplates possibility of unspecified settlement methods other than commuted value or annuity purchase Eliminates proviso that wind-up expenses may be ignored if funded ratio over 100% Actuarial Standards Board – Pension Specific Standards

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Other Draft SOP Changes Accounting Valuations Reporting requirements may be satisfied by reference to a funding valuation report e.g. data or plan provisions

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Educational Guidance The following topics are contemplated: Hypothetical wind-up service cost and gain/loss Risk analysis Discount rates for going concern valuations

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Future Timeline Comment Deadline:November 14, 2008 Release of Exposure: Draft, targeted March 2009 Final Decisions of: ASB 2009 Implementation Date:TBD

2008 General Meeting Assemblée générale General Meeting Assemblée générale Actuarial Standards Board – Pension Specific Standards Process Joint ASB/PPFRC Working Group established by ASB as the “designated group” for the Standard The Working Group is supported by Chris Fievoli, CIA Resident Actuary to compile comments PPFRC responsible for developing Educational Notes for approval by Practice Council