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IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies

Ananya, an actuary, advises a pension fund trustee board. While preparing a valuation she discovers that her own firm also advises the sponsoring employer on a deal that could reduce the employer's funding of the pension fund. Which action best reflects professional disclosure duties?

Ananya should promptly disclose the conflict to both the trustees and the employer, then manage it with safeguards or decline the work if she cannot remain objective. Timely, open disclosure lets those affected judge the advice, which the Actuaries' Code expects.

  1. ASay nothing, because the firm's two engagements are in separate teams
  2. BDisclose the conflict to both parties promptly, and manage it or decline the work if it cannot be managedCorrect
  3. CDisclose only to the employer, as the employer pays the fee
  4. DComplete the valuation first and disclose after the report is issued
  5. Disclose only if the trustees ask about other engagements

Explanation

A conflict of interest must be identified and disclosed in a timely way to those affected. The actuary should then manage it, for example by safeguards, or decline if objectivity cannot be assured. Selective or late disclosure leaves the trustees unable to weigh the advice properly.

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