Actuarial Monitoring Programme – observations from pilot phase

The Financial Reporting Council (FRC) has published on the 7^th of April the key observations from the pilot phase of its actuarial monitoring programme.

The FRC launched a pilot actuarial monitoring programme in September 2023 to assess the effectiveness of Technical Actuarial Standards (TASs) and improve actuarial work quality in pensions and insurance. The pilot highlighted good practices and areas for improvement, acknowledging sector differences. Practitioners are encouraged to reflect on the findings and ensure proportionate compliance.

The FRC is responsible for setting and maintaining technical actuarial standards . The voluntary monitoring programme strengthens the FRC’s engagement with practitioners to gain insight on their application of its principles-based Technical Actuarial Standards (TASs).

The key observations from the pilot phase  are as follows:

Reliance on centrally developed processes, controls or models

• Practitioners often rely on centrally developed processes, controls, or models, which can significantly impact their actuarial work. The FRC observed varied practices in how practitioners justify this reliance and ensure compliance with TAS 100, particularly Principle 5, which requires models to be fit-for-purpose and adequately tested. In some pensions cases, it was unclear how this was demonstrated. Practitioners must use judgement and consider scheme-specific adaptations when relying on central models.

Evidence of compliance

• The pilot exercise revealed varied approaches to evidencing compliance with TASs, with some practitioners using internal frameworks and demonstrating good practices. It also highlighted challenges in evidencing certain provisions, such as those relating to follow-up communications. These areas will be explored further in future monitoring programme cycles.

Application of proportionality and materiality

• TAS requirements should be applied proportionately, based on the nature and complexity of the work and its value to the user. The review showed varied interpretations of proportionality, with good examples in pensions communications and insurance model governance. Practitioners are encouraged to consult the guidance on proportionality for practical examples.

Application of TASs – using actuarial information as inputs

• In both insurance and pensions contexts, practitioners often use outputs from others as inputs to their work. The review found that some did not clearly show how they ensured these inputs were appropriate. Such inputs may be treated as data under TAS 100, which requires effective checks and controls to confirm accuracy, completeness, and suitability.

Documentation of work

• TAS 100 Principle 6 requires clear, detailed documentation to support understanding and review of actuarial work. Good documentation enhances accountability and helps prevent errors. The review found stronger documentation practices in insurance than in pensions, where some submissions lacked sufficient detail or were not prepared promptly.

By continuing to embed these standards across our engagements, SDA will not only align with regulatory expectations but also strengthen the quality, reliability, and value of the actuarial advice and services we deliver to clients.