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IAI Actuarial Core Principles · Business Management · Skills and knowledge for working as an actuary in financial services

A pension consultant in Chennai is developing the solution for a corporate gratuity fund. Which activity belongs in the developing the solution stage of the Actuarial Control Cycle?

Selecting the model, setting demographic and economic assumptions and testing sensitivity are the core of developing the solution. Agreeing the engagement terms is part of specifying the problem, and comparing actual with assumed exits is part of monitoring the experience.

  1. ASelecting the model structure and setting the demographic and economic assumptions, then testing the sensitivity of resultsCorrect
  2. BAgreeing the terms of engagement with the trustees
  3. CComparing last year's actual exits with the assumed exits
  4. DRecording the client's initial request in a meeting note
  5. Informing members of the final benefit changes

Explanation

Developing the solution covers building the model, choosing assumptions and testing sensitivities. Agreeing terms and recording the request belong to specifying the problem, while comparing actual exits with assumptions is monitoring. Informing members falls under implementation or communication.

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