[Federal Register Volume 64, Number 47 (Thursday, March 11, 1999)]
[Notices]
[Pages 12149-12150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5868]


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 Notices
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains documents other than rules 
 or proposed rules that are applicable to the public. Notices of hearings 
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 delegations of authority, filing of petitions and applications and agency 
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  Federal Register / Vol. 64, No. 47 / Thursday, March 11, 1999 / 
Notices  

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JOINT BOARD FOR THE ENROLLMENT OF ACTUARIES


Restructuring of Enrolled Actuary Examinations

AGENCY: Joint Board for the Enrollment of Actuaries

ACTION: Notice.

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SUMMARY: This notice describes the proposal by the Joint Board for the 
Enrollment of Actuaries (``Joint Board'') to restructure the 
examinations it offers to those individuals seeking the status of 
Enrolled Actuary (EA). It also provides notice of the Joint Board's 
proposal for awarding transition credits to those individuals who have 
completed, or will complete, part of the current enrollment examination 
program before the spring of 2001, when the Board expects to begin 
offering the new examinations. Finally, this notice provides interested 
parties with an opportunity to comment on the proposals.

DATES: Written comments on these proposed changes to the enrollment 
examinations or on the proposed transition credits are invited and must 
be received on or before April 26, 1999.

ADDRESSES: Written comments should be submitted with a signed original 
and three copies to the Office of the Director of Practice, Internal 
Revenue Service, at the following address: Mr. Patrick W. McDonough, 
Director of Practice, Internal Revenue Service, Office of Director of 
Practice C:AP:DOP, 1111 Constitution Avenue, NW, Washington, D.C. 
20224.
    All submissions will be open to public inspection and copying in 
room 1621, 1111 Constitution Avenue, NW, Washington, D.C. from 9 a.m. 
to 4 p.m.

FOR FURTHER INFORMATION CONTACT: Paulette Tino, Joint Board for the 
Enrollment of Actuaries, at (202) 622-7192, or Michael Roach, Joint 
Board for the Enrollment of Actuaries, at (202) 622-3415.

SUPPLEMENTARY INFORMATION:

Background

    The Joint Board was established by the Secretary of the Treasury 
and by the Secretary of Labor under the authority of section 3041 of 
the Employee Retirement Income Security Act of 1974 (ERISA). The Joint 
Board is responsible for the enrollment of individuals who wish to 
perform actuarial services under ERISA. Consistent with that mandate, 
the Joint Board has promulgated regulations governing eligibility for 
enrollment. Those regulations are published at 20 CFR Part 901. An 
individual who wishes to be enrolled may satisfy the examination 
requirements for enrollment by passing the examinations offered by the 
Joint Board. At present the examinations leading to recognition as an 
Enrolled Actuary consist of two examinations, one of which is in two 
segments. The basic actuarial examination covers actuarial mathematics 
and consists of two segments, namely, actuarial mathematics (EA-1A) and 
pension actuarial mathematics (EA-1B). The pension law examination 
covers ERISA and other relevant statutes and their application to 
specific problems (EA-2). The last major revision of the format of the 
enrollment examinations was in 1984.
    Since the last revision of the enrollment examinations, the law and 
regulations relating to pension plans have been amended many times. As 
a result, the current format of the enrollment examinations no longer 
provides the examiners with a sufficient opportunity to test the 
candidate's knowledge of the relevant pension law and of actuarial 
mathematics. The need to cover the types of actuarial problems arising 
under current pension laws and the need to conform the Joint Board's 
examination programs to recent developments in actuarial theory and 
practice have led the Joint Board to conclude that its current 
examination structure needs to be improved. The Board has determined 
that a restructuring of its examinations will improve its ability to 
determine whether those who seek enrollment have demonstrated 
competence in both the law and the actuarial theory which is relevant 
to the performance of pension actuarial services.
    These matters were discussed by the Advisory Committee on Actuarial 
Examinations and the public at a meeting held for that purpose on June 
30, 1998. Further consideration has been given to these issues by the 
Joint Board and by the co-sponsors of its examinations, the Society of 
Actuaries and the American Society of Pension Actuaries. As a result of 
these discussions, the Joint Board, the Society of Actuaries, and the 
American Society of Pension Actuaries have agreed that a restructuring 
of both the basic actuarial examination and the pension law examination 
is needed for adequate testing of candidates for enrollment.

Executive Order 12866

    Executive Order 12866 requires agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects; distributive impacts; and equity). Since no modification of 
any regulation is contemplated in this Notice, Executive Order 12866 
does not affect this notice.

Regulatory Flexibility Act, Unfunded Mandates Reform Act of 1995, and 
Small Business Regulatory Enforcement Fairness Act of 1996

    Because the changes to the examination program of the Joint Board 
contemplated in this Notice do not require any change to existing 
regulations, the statutes cited in the caption of this section do not 
affect this Notice.
    Drafting information. The principal author of this Notice is Ms. 
Paulette Tino, Chair, Joint Board for the Enrollment of Actuaries.

Proposed Modification

    The Joint Board for the Enrollment of Actuaries has under 
consideration the restructuring of the examinations it offers under 20 
CFR 901.13(d)(1). The need for restructuring is based on the expansion 
of the body of law affecting the private pension system and the 
corresponding increase in the complexity of the work for which enrolled 
actuaries are responsible. The syllabus of the current law examination, 
one of two examinations an individual must pass in order to meet the 
knowledge requirement for enrollment,

[[Page 12150]]

does not provide sufficient opportunity to test a candidate's knowledge 
of the relevant pension law. In addition, the pension mathematics 
segment of the basic actuarial examination does not cover sufficient 
material to test a candidate's ability to apply sound actuarial 
techniques to the increasingly complex regulatory environment in which 
defined benefit pension plans operate.
    As a result of discussions held at a public meeting on June 30, 
1998, and in other public forums, the Joint Board and the examination 
co-sponsors, the Society of Actuaries and the American Society of 
Pension Actuaries, propose to restructure the examination program.
    The major topics for the restructured basic actuarial examination 
would be (1) compound interest, and (2) life contingencies. These 
topics are now covered in the first segment of the basic actuarial 
examination (EA-1A). The restructured examination covering these topics 
would be 2\1/2\ hours long, the same length as the current EA-1A 
examination.
    The restructured pension law examination would be offered in two 
segments. The first would cover basic pension mathematics, including 
the law and regulations that relate to funding qualified defined 
benefit pension plans that are neither overfunded nor seriously 
underfunded. The second segment would cover the remaining relevant law 
and regulations. This would include treatment of overfunded plans, 
deficit reduction contributions, qualification standards, etc. A 
minimum standard of competence would be established for each segment. 
Each segment of the restructured pension law examination would be 4 
hours long.
    It is the Joint Board's intention to offer each examination once a 
year. The basic actuarial examination and the second segment of the 
pension law examination would be offered in the spring. The first 
segment of the pension law examination would be offered in the fall. It 
is anticipated that the restructured program will take effect in the 
spring of 2001 when the basic actuarial examination and the second 
segment of the pension law examination will be offered.
    Appropriate transition credits would be accorded to persons who 
have successfully completed portions of the enrollment examination 
before 2001. The Joint Board is considering the following system of 
transition credits:

    (1) A person who has successfully completed the first segment of 
the current basic actuarial examination before 2001 will receive 
credit for the restructured basic actuarial examination and will 
satisfy the examination requirement of the Joint Board's regulations 
only if he or she passes both segments of the restructured pension 
law examination.
    (2) A person who has successfully completed both segments of the 
current basic actuarial examination before 2001 will receive credit 
for the restructured basic actuarial examination and will satisfy 
the examination requirement of the Joint Board's regulations only if 
he or she passes both segments of the restructured pension law 
examination.
    (3) A person who has successfully completed the first segment of 
the current basic actuarial examination and the current pension law 
examination before 2001 will receive credit for the restructured 
basic actuarial examination and for the second segment of the 
restructured pension law examination and will satisfy the 
examination requirement of the Joint Board's regulations only if he 
or she passes the first segment of the restructured pension law 
examination.
    (4) A person who has successfully completed the second segment 
of the current basic actuarial examination and the current pension 
law examination before 2001 will receive credit for both segments of 
the restructured pension law examination and will satisfy the 
examination requirement of the Joint Board's regulations only if he 
or she passes the restructured basic actuarial examination.
    (5) A person who has successfully completed the current pension 
law examination before 2001 will receive credit for the second 
segment of the restructured pension law examination and will satisfy 
the examination requirement of the Joint Board's regulations only if 
he or she passes the restructured basic actuarial examination and 
the first segment of the restructured pension law examination.
    (6) A person who does not meet the requirements of one of the 
preceding five paragraphs before 2001 will receive no credit for any 
examinations passed under the current examination program and will 
satisfy the examination requirement of the Joint Board's regulations 
only if he or she passes the restructured basic actuarial 
examination and both segments of the restructured pension law 
examination.

    The above restructuring is subject to approval by the respective 
co-sponsors of the examination. This proposal is intended to reflect 
the views expressed at the public meetings held by the Joint Board and 
by the co-sponsoring organizations up to the present time. However, the 
Joint Board welcomes further public comments on the restructuring. 
Persons desiring to submit comments should submit them in writing on or 
before April 26, 1999, to the address given above.
    Examination candidates will be furnished with more details on the 
restructuring after it has been approved.
Paulette Tino,
Chair, Joint Board for the Enrollment of Actuaries.
[FR Doc. 99-5868 Filed 3-10-99; 8:45 am]
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