The story is that a local actuary, Timothy W. Sharpe, of west suburban Geneva, whose bread-and-butter work is pension plans for police and firefighters made a change from the GAM-71 to the RP-2000 mortality table this past year, boosting the pension liabilities substantially.
His rationale for using the old table?
Sharpe defended his actions saying he was using the same tables the Illinois Department of Insurance offered until 2012.
. . .
“Pension boards would request a calculation from the state Department of Insurance and then a second calculation from him.
“They wanted to verify they were getting consistent numbers from independent sources,” Sharpe said. “They hire the actuary, then they receive results from the Department of Insurance,” he said. “They wanted to reconcile the number they received.”
One local agency even filed a complaint against Sharpe with the Actuarial Board of Counselling and Discipline (ABCD).
But this is an incomplete story. Does he mean to say that the Illinois Department of Insurance used the outdated table and he just followed suit? Which makes a lot more sense than a single actuary doing so — especially since there’s not really much incentive for an actuary to use old tables, but plenty of reason for the plan sponsor to want to minimize liabilities and pressure the actuary to produce results that meet their goal.
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