Actuaries in Pension Systems
The field of occupational pensions, as well as broader questions related to retirement provision, is represented within the DAV by the branch association IVS (Institute of Pension Actuaries). The scope of work for IVS actuaries has significantly expanded in recent years. In addition to traditional calculations based on actuarial models and methods, it is increasingly necessary to place mathematical issues in retirement provision within the broader economic, tax, and legal context and to communicate the results in a transparent and understandable way. The "Pension Actuaries" of IVS possess the broad expertise required, making them specialists in advising and supporting all types of pension systems.
The work of the IVS experts is primarily focused on the valuation of obligations in the area of occupational pensions across all implementation forms. In addition, the area of private pension provision also plays an important role in the work of IVS members.
Calculation of Pension and Provisions Reserves
For pension funds, pension schemes, support funds, as well as for direct commitments and direct insurance, actuaries calculate pension and provisions reserves according to supervisory and tax regulations, as well as commercial and international accounting principles. Additionally, they prepare analyses of the future development of pension obligations and their financial impact on companies, and calculate the financing of pension claims for the workforce of companies.
Responsible Actuaries at Pension Institutions
At legally independent pension institutions, IVS actuaries review the financing and long-term sustainability of obligations, continuously monitor the developments in the portfolio, assess the financial situation, calculate the required cover capital, and develop proposals for surplus participation or benefit reductions if necessary. They also contribute to the drafting and modification of benefit guidelines. They bear special responsibility in their role as responsible actuaries at pension institutions (pension or funeral funds, pension schemes).
Pensions Committee
The Working Groups of the Pensions Committee
To address the diverse topics in the field of occupational pensions, the Pension Committee has established the following active working groups:
The working group develops biometric assumptions specifically for pension obligations of employers, differentiating itself from the working group focused on pension funds and pension schemes. It examines the applicability of the Heubeck 2018 G mortality tables, develops minimum standards, and analyzes specific technical issues, such as socio-economic effects and cohort effects. The results are regularly published and aim to improve the methodology and relevance of future standard tables.
The working group focuses on cross-pillar pension information, with particular attention to political developments. It will examine technical and actuarial aspects and develop statements regarding the comparability of pension benefits. Additionally, established approaches for product comparisons will be incorporated, and collaboration with other stakeholders, such as associations and research teams, is planned to ensure comprehensive exchange.
The working group examines the conditions under which contribution-based pension promises with minimum benefits (BZML) and contribution-based benefit promises (BoLZ), as well as salary conversion, can be designed in compliance with labor and supervisory law. It analyzes the compatibility of these promises with the relevant legal requirements and actuarial principles, particularly in the insurance-like sector. Additionally, the working group reviews options for designing BoLZ and necessary minimum guarantees while adhering to labor law requirements.
The working group addresses issues related to capital investment in occupational pensions, taking into account the long-term nature of pension obligations. It develops guidance on Asset-Liability Management (ALM) strategies, comments on regulatory requirements, and creates implementation strategies in line with directives from the Federal Financial Supervisory Authority (BaFin) and EIOPA. A current focus is on BaFin's new interpretation regarding the investment policy of pension institutions, where the stability of future capital returns for both obligations and new investments is becoming increasingly important.
The working group deals with fundamental issues related to pension funds as a method of implementing occupational pension schemes. It monitors current developments and legal frameworks at both the national and European levels from an actuarial perspective and reviews existing DAV documents on pension funds. In doing so, it specifically takes into account the regulatory requirements that apply to pension funds.
The working group deals with fundamental actuarial issues related to pension schemes in occupational pensions and coordinates the activities of all FAV working groups that also focus on pension funds. It discusses various requirements and develops statements, technical concepts, and guidance for actuaries in this area.
The working group is responsible for the independent quality assurance of the specialist knowledge exams in the subject of "Pensions" and, starting in 2021, also for the additional exams for the IVS expert qualification.
The working group deals with the accounting of pension liabilities and other long-term employee obligations under the German Income Tax Act (EStG), the German Commercial Code (HGB), IFRS, and US-GAAP. It formulates statements on new regulations and initiatives, updates the guidelines for IAS 19, and maintains close contacts with institutions that also deal with accounting issues and occupational pensions.
The working group addresses various topics related to pure defined contribution plans, including communication, pension techniques, and accounting, and produces technical papers on these specific topics. Additionally, the working group evaluates new draft laws and regulatory changes related to pure defined contribution plans and provides comments on them.
The working group deals with topics such as the BaFin circulars on Own Risk and Solvency Assessment (ORSA) and the minimum requirements for the business organization of occupational pension institutions (EbAV), the design of the independent risk control function (IRCF), the actuarial function (VMF), as well as the contents of an own risk assessment and the tasks of risk management.
The working group monitors public discussions on collective retirement provision in Pillars I and II in Germany. It conducts analyses of selected articles, contributions, studies, and publications on retirement provision and evaluates them from an actuarial perspective. Additionally, a fact-check of selected statements on social security is carried out, with a particular focus on intergenerational fairness and current political reform considerations regarding statutory pension insurance.
The working group deals with the actuarial aspects of pension equalization in occupational pension schemes. As part of its technical work, the group provides practical guidance through notes and reports.
The pool is a flexible structure for collaboration within the Pension Committee, allowing members to participate in various projects. Each project has a clearly defined task and is time-limited. Members of the pool can individually decide which projects they want to join, based on their interests and availability, giving them the opportunity to contribute their strengths in different areas of expertise.
Publications of the Committee
The Pension Committee of the DAV closely monitors and analyzes developments and risks in the area of occupational pension schemes and continuously prepares reports in the form of professional guidelines and outcome reports. These are designed to provide actuaries working in this field with assistance to support them in performing actuarial tasks.
To learn more about the professional guidelines and outcome reports of the Pension Committee, please select the "Pensions" category in the relevant section of the website.
The PENSION Section
The DAV's and DGVFM's section meetings enable their members to keep their required specialist know-how and expertise up to date as well as enabling the transfer of the results of fundamental scientific and/or academic work into everyday actuarial practice. In addition, they also promote and foster the exchange of experience and knowledge and, at a personal level, enable networking with peers.
The meetings of the PENSION Section address technical questions as well as current trends and challenges in the field of pension provision, with a particular focus on actuarial work. Relevant developments in labor law, tax law, insurance law, and accounting are also considered, as well as findings from scientific research. The group's key topics include current issues from all implementation routes of occupational pension schemes, especially (biometric) actuarial assumptions, issues related to the ongoing low interest rate environment, and the implementation of requirements arising from the EU Pension Funds Directive.
The PENSION Section meetings take place oncea year during the Annual Meeting of the DAV and DGVFM at the end of April. Participation in the meetings is open to any interested party and not restricted to members of the DAV or the DGVFM.
IVS Forum
Another platform for discussing technical topics in the field of pension provision, as well as for mutual exchange of experiences among colleagues, is the IVS Forum. The goal of the forum is always to quickly and directly inform the (responsible) actuaries of pension institutions about current developments in their field of work, with a particular focus on their daily tasks. The technical presentations by speakers are complemented by discussions moderated by experienced experts. These discussions provide participants with the opportunity to address any remaining questions or offer additional insights.
The IVS Forum takes place annually in conjunction with the IVS members' meeting and the aba conference of the Mathematical Experts.
