Government Pension Plans in Focus: Is the Plan Actuarially Sound?

If stakeholders in a government entity’s pension plan were told that the plan is actuarially sound, they would probably believe that a simple, clear definition of actuarial soundness is known and understood by all actuaries and that every actuary would agree that the plan is in good financial shape. But a word or phrase can have different meanings depending on the context, and actuarially sound is no exception. This article examines how the simple phrase “actuarially sound” can be a source of confusion for government entity stakeholders, and it provides more specific questions to follow the first critical follow-up question: In what context?

Read the full white paper here:

Understanding Risk in Governmental Pension Plans

The word risk invokes a range of responses. The timid (or wise, depending on your point of view) think of risk as something to be avoided—or at least minimized. The more aggressive see risk as an opportunity and look for rewards to be reaped. We see risk as something to be analyzed; quantified where possible; and, most importantly, understood. In the realm of public pension plans, a lack of understanding of the numerous risks is evident.

Public pension funds face several general risk categories: economic, actuarial, operational/administrative, and fiduciary.

This whitepaper will focus on the economic and actuarial risks. Download it here.