CAA's Comments on ISAP 3 – Actuarial Practice under IAS 19 Employee Benefits - Exposure Draft

Dear Sir or Madam

Exposure Draft – Actuarial Practice under IAS 19 Employee Benefits

This response is submitted on behalf of the Caribbean Actuarial Association.  Thank you for the opportunity to comment on the Exposure Draft. 

About CAA

The Caribbean Actuarial Association or CAA is a representative body for actuaries working in the Caribbean region.  Its main objective is to support and develop actuarial science within the Caribbean and assist actuaries with issues that are of specific concern to the region.  The CAA is a full member of the International Actuarial Association. 

Practice Standards

The CAA is in the process of developing practice standards to assist actuaries working within the region.  In light of the CAA’s resources, we appreciate the IAA’s assistance in developing ISAPs for the CAA to consider adopting as practice standards.


Employers in the region generally account for their post-retirement benefits plans under IAS 19 and this often requires actuarial input.  It should be noted that:

  • local financial markets are very much undeveloped and, in particular, high-quality corporate bonds denominated in local currency are virtually non-existent;
  • there are few issues of government bonds of appropriate duration and there is very little secondary market activity in such bonds;
  • the outlook for key economic indicators such as inflation is far from clear; and
  • the lack of statistical data to determine demographic assumptions such as mortality rates makes it difficult to agree on appropriate assumptions for the purpose of calculating liabilities and costs for post-retirement benefits.

As a result, the process for setting the IAS 19 assumptions includes a higher degree of subjectivity than would apply in more developed financial markets.

With this in mind we are concerned that section 2.6 implies that the assumptions that a reporting entity should use for its IAS 19 disclosures can be determined with a fairly high degree of accuracy.  We do not believe this to be the case.  In our opinion, there is a range of assumptions that satisfy the requirements of IAS 19 and for entities reporting in the region, this range can be quite wide.  For example, it is very difficult for an actuary to recommend an appropriate discount rate for entities reporting in Guyana as the longest duration of regularly issued government debt is 364-days (treasury bills).  We therefore recommend that the ISAP includes a section that where necessary, the actuary should raise this uncertainty with the reporting entity.

In section 2.7.4 we are not sure why the actuary should seek guidance from the principal if the asset ceiling applies and in particular to ask whether IFRIC 14 applies.  We would expect the actuary to discuss the issue with the reporting entity if necessary, and to advise on the application of the asset ceiling in accordance with the requirements of IAS 19 (using the guidance provided by IFRIC 14 as required).  We suggest that this section be re-worded. 


CAA Pensions Committee

Chair – Simon Sutcliffe

Willard Brown

Tricia Chamley

Astor Duggan

Constance Hall

Judith Veira

Shelley Worrell


ISAP3 can be found at: