Proposal Updates Eligibility to Provide Actuarial Services to ERISA Plans

September 18, 2009 ( - The Joint Board for the Enrollment of Actuaries has released proposed amendments to the regulations governing the performance of actuarial services under the Employee Retirement Income Security Act (ERISA).

The proposed amendments would update the eligibility requirements for performing actuarial services for ERISA-covered employee pension benefit plans, including the continuing education requirements, and the standards for performing such actuarial services.   The proposed amendments would affect employee pension benefit plans and the actuaries providing actuarial services to those plans.

The Joint Board said it determined that the regulations need to be updated to reflect changes in the law and in industry practice.

No changes are made under the proposed regulations to the materials covered by either the basic actuarial examination or to the examination for pension actuarial knowledge, however, the rules would require that the pension actuarial examination must be completed within the ten-year period immediately preceding the date of application for initial enrollment.   The Joint Board said such a requirement is needed because of the frequent changes in pension law and a need for an enrolled actuary to have current knowledge of pension requirements.

With respect to qualifying experience, the proposed regulations would require that all actuarial and pension actuarial experience be certified in writing by individuals with knowledge of the individual’s experience.   If the individual’s supervisor is not an enrolled actuary, the pension actuarial experience must be certified by both the supervisor and an enrolled actuary with knowledge of the individual’s pension experience.   As in the current regulations, the qualifying experience must have been completed within the last 10 years before the application for enrollment.

The proposed regulations also clarify existing provisions and add some new provisions regarding standards of professional responsibility and conflicts of interest.

To reflect changes made in the law made by the Pension Protection Act of 2006, the proposed regulations would provide that an enrolled actuary must exercise sufficient due care, diligence, skill, and prudence as is required to ensure that all actuarial assumptions are reasonable individually and in combination.   The proposed regulations would also require that all calculations not only be accurately carried out but also properly documented.

The lists of core and non-core subject matter for purposes of continuing education are generally unchanged, but the proposed regulations would provide that all materials included on the syllabi of any of the pension actuarial examinations offered by the Joint Board during the current and immediately preceding enrollment cycles would constitute core subject matter.  

With respect to CPE programs, the proposed regulations would clarify the permissible forms of qualifying programs.   The regulations would also retain the use of alternative means for completion of CPE, but continue to limit the portion of total CPE that may be earned under these alternative approaches.   The regulations would also add a provision that awards CPE credits to a co-author of a publication or a person listed as a major contributor to a publication.

The proposed regulations would also clarify the responsibilities of program sponsors by requiring that those who submit requests to the Executive Director to berecognized as qualifying sponsors include sufficient information in their requests to establish that their programs would satisfy the applicable requirements for qualifying programs.

The Joint Board agrees that new technologies allow enrolled actuaries and qualifying sponsors more flexibility in their choices of form and delivery of CPE programs and should be reflected when granting CPE credits.   However, to address challenges regarding verification of attendance and completion of CPE under certain programs, the proposed regulations would allow qualifying programs to include both formal programs as well as correspondence or individual study programs (including audio and/or videotaped programs) and teleconferencing (including W ebcasts) provided that the qualifying program meets certain requirements with regard to verification of attendance and measurement of completion.

The proposed regulations would amend the recordkeeping requirements to place more reliance on qualifying sponsors to maintain records of the course content since they generally maintain records of that content in any event. The enrolled actuaries will now be required only to retain certificates of completion and/or instruction as evidence of satisfaction of CPE requirements.   In addition, the proposed regulations would expressly allow the Joint Board to request CPE records from the enrolled actuary and the qualifying sponsor.  

The Joint Board said it is willing to consider W eb-based applications or other technology for this information in the future.

With respect to the renewal cycle and required CPE credits, the Joint Board continues to believe that the current three-year renewal period is appropriate, however, it proposes to delay the start date for the renewal cycle for qualifying sponsors by one year after the renewal cycle for enrolled actuaries in order to ease the administrative demands on the Executive Director and his staff, and to facilitate renewals by qualifying sponsors. The proposed regulations would also retain the current requirement for a total of 36 hours of CPE (half of which must be core subject matter) for the initial three-year enrollment renewal cycle, for individuals who renew on a timely basis.  

However , the proposed regulations would reduce the number of core CPE credits required after the enrolled actuary's initial enrollment renewal from 18 required core hours to 12 required core hours.   In addition, the proposal includes a new requirement that a minimum of two hours of core CPE be allocated to discussions of ethical standards in each enrollment cycle. Topics that would meet this requirement include (but are not limited to) discussions of professional codes of conduct, professional responsibilities, and any of the topics addressed in section 901.20 of these proposed regulations.

These regulations are proposed to generally apply 30 days after the date they are published as final regulations in the Federal Register.    

The proposed regs will be published in the Federal Register for September 21, 2009.