Actuarial Projections of Pensions or Social Security Funds in Australia, Canada, Japan, Korea, the United Kingdom, and the United States
The Australian Government Actuary, located within the Australian Treasury, prepares actuarial cost estimates of the Public Sector Superannuation Scheme (PSSS) and the Commonwealth Superannuation Scheme (CSS) every 3 years, most recently in 2006. The report identifies the projected actual Australian Government employer costs; the size of the Australian government’s unfunded superannuation liability; and the level of the notional employer contribution rates required to cover the costs of the schemes.
Canada’s Office of the Chief Actuary, located in the Superintendent of Financial Institutions Canada, undertakes a review of the Canada Pension Plan as required by legislation. To date, 23 actuarial reports have been prepared since 1964, though their frequency and time horizons have varied over this period. Since 1997, actuarial projections have been standardized to cover a 75-year period and to be published every 3 years.
Japan’s Chief Actuary of the Ministry of Welfare conducts a mandatory review of the financial status of the public pension system at least once every five years as required in legislation, most recently in February 2009. The reports update the underlying modeling assumptions and checks whether the replacement rate is on track to fall below its prescribed minimum level in the future.
In Korea, an assessment of sustainability of the Korean National Pension Scheme is required by legislation every 5 years. The introduction of actuarial projections as of 2003 represents one of the major changes in the 1998 amendment to the National Pension Act. To date, two actuarial projections have been prepared: the first in 2003, the second in 2008.
The United Kingdom Government Actuary’s Department prepares reviews every 5 years of the National Insurance Fund. The reviews provide a 60-year projection to estimate the contribution rates required to be paid to the National Insurance Fund in future years in order to meet expenditure on a pay-as-you-go basis. Projections, however, may be updated more frequently as necessary to illustrate the financial consequences of reform proposals and new draft legislation. An external peer review of the department’s projections is conducted periodically, most recently in 2002.
In the United States, the Social Security Act was amended in 1968 to provide for the appointment of an advisory council every 4 years beginning in 1969. The council was to review the status of the Social Security and Medicare trust funds as well as the scope of coverage and adequacy of benefits under the Social Security and Medicare programs. The statute specifically authorized the council to engage the technical assistance necessary to carry out their functions. A technical advisory panel also reviews the methods and assumptions used in the annual projections for the Social Security trust funds.