Actuarial Reviews What is an Actuarial Review?
Actuarial Reviews are intended “to review present and future financial developments of existing or new Social Security schemes, with the possibility to include analyses of the financial effects of major structural reforms in the case of existing schemes.”
The International Financial and Actuarial Service, International Labour Office (ILO FACTS)
Rationale for conducting an Actuarial Review of the NIS
The rationale for conducting Actuarial Reviews is:
- To ensure that the NIBTT is in compliance with the statutory requirement specified in Section 70 (1) of the NI Act. “For the purposes of assessing the balance between the contributions and rates of benefits, an actuarial review of the system of national insurance shall be undertaken within three years of the date on which the first contributions under this Act are payable and thereafter at five-yearly or such shorter intervals as the Board may determine…” and Section 22 (1), to set the upper limit on administrative costs of NIBTT based on: “…the recommendations of the actuary arising out of the periodic review of the National Insurance System”.
- To determine whether the NIS is operating on a sound financial basis by assessing the short and long-term financial sustainability of the NIS; and
- To analyse the financial impact of modifications to current NIS provisions, and recommend modifications that may render the NIS a more effective and efficient mechanism for providing social insurance protection. Some of the areas of possible modification include:
- Financing of benefits
- Benefit payments
- Eligibility criteria
Actuarial Reviews have been an important tool in managing the success of Social Security Systems around the world.