American Academy of Actuaries - Qualification Standards

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Qualification Standards near final

(Note: This article was published in the July 2007 Actuarial Update.)

At its May 23 meeting, the Academy’s Board of Directors adopted revisions to the Qualification Standards as recommended by the Academy’s Committee on Qualifications. Pending clarification of the language in connection with draft statements of actuarial opinion (SAOs), the revised standards are expected to be finalized this summer.

In a June electronic letter to all Academy members, Academy President Steven Lehmann discussed the changes in detail.

“These revised Qualification Standards represent a significant step forward for the integrity of our profession,” Lehmann wrote in his letter. “They will enhance the actuary’s reputation and, ultimately, increase the value proposition actuaries bring to clients.”

“The new standards—the culmination of a major effort by the Committee on Qualifications, chaired by Kathy Riley—are consistent with the profession’s goal of uniform continuing education requirements,” said Allan Ryan, the Academy’s vice president for professionalism. “The broadening of the scope of the Qualification Standards will affect most practicing actuaries.”

Highlights

Major highlights of the revised standards include the following:

The new standards define what an SAO is and will apply to all actuaries who issue SAOs in the United States. The current standards apply only to prescribed statements of actuarial opinion.
Annual continuing education (CE) requirements will increase under the new standards from 24 hours every two years to 30 hours per year, of which a minimum of three CE credit hours must cover professionalism topics and a minimum of six must be from organized activities that involve interaction with actuaries or other professionals working for different organizations. Relevant in-house meetings can satisfy the requirement of interaction with actuaries or professionals working for different organizations by using outside speakers.
Other than the six organized CE credit hours, the remaining credit hours under the new standards may be obtained from other activities, including reading actuarial literature, statutes or regulations, and other books, papers, or articles, or by writing professional papers on relevant technical or professional topics.
The new CE requirements will take effect on Jan. 1 2008, but will be phased in so that only 24 hours of CE will be required in 2008. Beginning in 2009, the full 30-hour CE requirement will apply.
To satisfy part of the general qualification standard, actuaries will need three years of responsible actuarial experience—defined as work that requires knowledge and skill in solving actuarial problems, among other general qualification requirements.
To satisfy additional specialty requirements, actuaries may be required to have responsible actuarial experience in the specific area of actuarial practice relevant to the subject of the SAO.
Currently enrolled actuaries (EAs) are deemed to meet the CE requirements under the current standards for the issuance of PSAOs in the pension practice area if they are in compliance with the Joint Board for the Enrollment of Actuaries’ CE requirements. Through 2010, EAs who issue SAOs related to retirement plans to which ERISA applies will be exempt from the CE requirements of the new standards. However, beginning in 2011, the EA exemption will be very limited. EAs who issue SAOs other than the Form 5500 Schedule B certification and other government forms will need to satisfy the CE requirements of the new standards.

Multiyear project

Development of new Qualification Standards has been a multiyear project of the Academy’s Committee on Qualifications. A first draft was exposed for comment in May 2004 and a second version was exposed for comment in January 2006. The committee received over 200 comments on the second exposure draft from various groups and individuals.

As the standards are finalized, the Academy will be launching an effort to publicize the new standards and answer questions from the profession about how they will affect working actuaries. Among planned events is an informational webcast. Look for future articles in the Update and on the Academy website for details.

Contingencies

Actuarial Update