How frequently should a comprehensive actuarial audit be conducted according to recommendations?

How frequently should a comprehensive actuarial audit be conducted according to recommendations?

• A. Once a year
• B. Every two years
• C. At least once every five years
• D. Only when there are significant changes

Answer: (C)

A comprehensive actuarial audit is an essential element in managing and assessing the long-term financial viability of benefit plans. Conducting such an audit at least once every five years ensures that the actuarial assumptions, methodologies, and practices align with current data and best practices. This timeframe allows for a thorough review of the actuarial work, including assessments of funding levels, assumptions regarding demographic changes, and the evaluation of investment strategies. Having this regular schedule helps organizations catch any discrepancies or outdated assumptions that may affect the financial health of their retirement plans or other benefits. It also aligns with regulatory expectations and industry benchmarks, fostering confidence among stakeholders regarding the stability of the benefit plans. Conducting these audits too frequently, such as yearly, could lead to unnecessary costs and resource allocation. Conversely, waiting until significant changes occur might result in exposure to risks that could have been mitigated if a comprehensive audit had been performed within a structured timeframe. Hence, the recommendation to conduct a comprehensive actuarial audit at least once every five years strikes a balance between thorough oversight and practical resource management.

A comprehensive actuarial audit is an essential element in managing and assessing the long-term financial viability of benefit plans. Conducting such an audit at least once every five years ensures that the actuarial assumptions, methodologies, and practices align with current data and best practices. This timeframe allows for a thorough review of the actuarial work, including assessments of funding levels, assumptions regarding demographic changes, and the evaluation of investment strategies.

Having this regular schedule helps organizations catch any discrepancies or outdated assumptions that may affect the financial health of their retirement plans or other benefits. It also aligns with regulatory expectations and industry benchmarks, fostering confidence among stakeholders regarding the stability of the benefit plans.

Conducting these audits too frequently, such as yearly, could lead to unnecessary costs and resource allocation. Conversely, waiting until significant changes occur might result in exposure to risks that could have been mitigated if a comprehensive audit had been performed within a structured timeframe. Hence, the recommendation to conduct a comprehensive actuarial audit at least once every five years strikes a balance between thorough oversight and practical resource management.