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The Actuarial Standards Board (ASB) of the American Academy of Actuaries recently adopted a revision of Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. The ASOP, which underwent three exposure periods and received a total of 93 comments, provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a defined benefit pension plan and determining periodic costs or actuarially determined contributions for such plans. While other actuarial standards of practice address assumptions, asset valuation methods, and assessment of risk, the revised ASOP addresses broader measurement issues, including cost allocation procedures and contribution allocation procedures. The standard provides guidance for coordinating and integrating all of the elements of an actuarial valuation of a pension plan. Notable changes made to the existing 2013 version include expanding the scope to clarify the application of the standard when the actuary selects an output smoothing method and when an assumption or method is not selected by the actuary. The standard is effective for any actuarial report issued on or after Feb. 15, 2023; and if the measurement date in the actuarial report is on or after Feb. 15, 2023. The Academy will host a webinar this spring to look at the revised ASOP No. 4—what’s new, what’s changed, and what you need to know. Registration will open soon.
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