“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.”
But this description obscures a significant new required disclosure, one which follows years of controversy and acrimony within and among actuaries and the public pension plan community at large. The requirement was the overwhelming focus during the drafting and comment period.
The new required disclosure reflects economic reality better than any currently required number.
If nothing else, having a checklist to go through while working on modeling can help you make sure you don’t miss anything. Hey, ASB, make some handy-dandy sticky note checklists we can stick on our monitors to ask us:
3.1 Does our model meet the intended purpose?
3.2 Do we understand the model, especially any weaknesses and limitations?
3.3 Are we relying on data or other information supplied by others?
3.4 Are we relying on models developed by others?
3.5 Are we relying on experts in the development of the model?
3.6 Have we evaluated and mitigated model risk?
3.7 Have we appropriately documented the model?
Author(s): Mary Pat Campbell
Publication Date: April 2021
Publication Site: The Modeling Platform at the Society of Actuaries