The Actuarial Standards Board (ASB) of the American Academy of Actuaries adopted a revision of Actuarial Standard of Practice (ASOP) No. 27, now titled Selection of Assumptions for Measuring Pension Obligations. The standard provides guidance to actuaries when performing actuarial services that involve selecting assumptions, including giving advice on selecting assumptions, for measuring defined benefit pension plan obligations.
In June 2020, ASOP Nos. 27 and 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations, were both revised to expand the scope, provide additional guidance on the combined effect of assumptions, provide guidance on assessing assumptions not selected by the actuary, and to modify the required disclosure of rationale for assumptions selected.
Throughout the past few revisions, the ASB adopted identical language in ASOP Nos. 27 and 35 where practical and improved the similarity of layout and structure to simplify the overall guidance. The final step in the simplification was to combine the two current pension assumption ASOP Nos. 27 and 35 into one. When the revised ASOP No. 27 is effective as the single assumption standard for pensions, ASOP No. 35 will be repealed, and technical corrections will be made to ASOPs referencing ASOP No. 35. The ASB generally attempted to avoid changing the current guidance in both ASOPs except when the two standards took different approaches to the assumption selection framework.
During the exposure period, six comment letters were received and considered in making changes that are reflected in the revised ASOP No. 27, including clarifying that the standard applies when the actuary selects assumptions for the measurement of retiree group benefits obligations, as specified in ASOP No. 6, Measuring Retiree Group Benefits Obligations and Determining Retiree Group Benefits Program Periodic Costs or Actuarially Determined Contributions.
ASOP No. 27 is effective for any actuarial report that meets the following criteria: (a) the actuarial report is issued on or after January 1, 2025; and (b) the measurement date in the actuarial report is on or after January 1, 2025.
