Pensions
How to challenge pension actuarial reports that rely on unrealistic demographic or financial assumptions for funding.
This evergreen guide explains practical steps to scrutinize pension actuarial reports when demographic projections and financial assumptions appear unrealistic, detailing accessible approaches, evidence gathering, engagement with experts, and pathways to governance remedies.
July 25, 2025 - 3 min Read
Actuarial reports underpin how pension funds assess their future solvency, determine contribution rates, and set benefit expectations. When demographic assumptions—such as life expectancy, retirement age, and workforce participation—appear out of step with observed trends, the projections risk misrepresenting liabilities and funding needs. Financial assumptions, from expected investment returns to inflation, can disproportionately influence results. Citizens, trustees, and public administrators can, through careful review, identify biases, data gaps, and methodological choices that distort the funding picture. A disciplined approach starts with a plain-language summary of key assumptions, followed by a side-by-side comparison against independent benchmarks and historical outcomes to surface inconsistencies early.
The first practical step is to obtain the actuarial report in full, including the underlying methods, data sources, and any modeling software or scenarios used. Read the executive summary for big-picture conclusions, then drill into the footnotes and model descriptions. Note where sensitivity analyses are shown and which variables are deemed most impactful. Request copies of any external peer reviews, third-party validation, or actuarial opinions. If access is restricted by legal or administrative barriers, consult public records laws or freedom of information processes. Maintain a clear timeline for requests, and keep a log of responses, omissions, or delays that might indicate opacity or gatekeeping.
Build a fact-based critique using data, comparisons, and legal rights.
Transparent documentation is the backbone of credible actuarial work. A robust report should disclose the data history, including population projections, mortality cohorts, and retirement patterns used to derive liabilities. It should also justify selection of discount rates, asset return expectations, inflation trajectories, and wage growth assumptions. When certain inputs hinge on subjective judgments, the report should explain the reasoning and present alternative scenarios. If the report lacks a transparent audit trail, that deficiency alone can be a red flag suggesting the need for an external review. Citizens can compare disclosed assumptions with those used by other funds or well-regarded standards to assess reasonableness and consistency.
To challenge results effectively, assemble a small, evidence-driven team comprising an actuary, a public finance professional, and a legal adviser. The team can map the chain from inputs to outputs, identifying where a single assumption drives the outcome disproportionately. Prepare a request for a formal sensitivity analysis showing best-case, worst-case, and most-likely outcomes under varied demographic and economic futures. Document any mismatches between actual fund experience and forecasted results, such as realized investment returns or demographic shifts. Present those findings in a structured critique, supplemented by external sources, to foster constructive dialogue among trustees and oversight bodies.
Engage governance structures with precise, respectful questions.
A data-driven critique strengthens your case. Gather historical fund performance data, demographic trends, and actual retirement patterns for the fund’s membership. Compare these with the assumptions used in the current actuarial model. If the fund has experienced longer life expectancies or later retirement in practice than projected, highlight the discrepancy and quantify its impact on funding gaps. Use independent benchmarks, such as national actuarial standards or peer fund analyses, to show where the report diverges from established norms. Present charts or tables that illustrate the gaps, but ensure visual materials remain clear and non-technical for broader audiences.
Legal avenues complement technical critique. Review governing statutes, funding policies, and disclosure requirements to determine whether the actuarial report meets statutory timelines and transparency obligations. If a deadline was missed or key data withheld, cite the relevant clause and request corrective action. Consider whether conflicts of interest or scope limitations were disclosed. In some jurisdictions, actuaries owe duties to beneficiaries and regulators; invoking professional standards can support a formal inquiry or complaint. A well-structured legal prompt can prompt an independent re-evaluation without resorting to adversarial tactics.
Propose remedies that strengthen funding plans and transparency.
Engaging the governance process respectfully is essential. Schedule a formal presentation where you can ask targeted questions about how sensitive inputs were chosen, whether alternative models were tested, and how results would differ under plausible scenarios. Ask whether the assumptions have been updated to reflect recent demographic data, wage trends, or policy changes affecting retirement behavior. Request access to all scenario runs and the rationale behind selecting the final model. Encouraging a deliberative, transparent dialogue helps trustees weigh risks properly and demonstrates a commitment to responsible stewardship rather than confrontation.
When preparing questions, frame them around risk, uncertainty, and governance. Focus on whether the model adequately captures tail risks, such as extreme longevity improvements or sudden economic downturns. Inquire about the governance controls for model risk, including independent validation steps and periodic reassessment cycles. If the report relies heavily on a single optimistic scenario, push for a multi-scenario presentation that reveals the probability distribution of outcomes. Propose concrete action steps, such as adjusting contribution schedules or enhancing risk reserves, to mitigate identified vulnerabilities should the sensitivities prove material.
Consolidate findings into a credible, accountable inquiry.
Proposing practical remedies can move discussions from critique to constructive action. If findings indicate insufficient prudence in assumptions, advocate for revised demographic inputs, more conservative discount rates, or broader ranges in projections. Support such changes with simulations showing how funding sufficiency improves under revised parameters. Recommend enhanced disclosure practices, including a public appendix summarizing assumptions, data sources, and validation methods. Encourage periodic recalibration of models to reflect updated data, ensuring that the funding plan remains responsive to evolving realities rather than anchored to outdated expectations. A focus on governance also helps maintain public trust in the pension system.
Another useful remedy is procedural reform. Suggest formalizing an annual or biannual actuarial review process, with clear triggers for independent validation, public consultation, and written responses to stakeholder questions. Establish a publication standard that requires full access to inputs, methods, and sensitivity analyses, accompanied by plain-language explanations. Strengthen oversight by creating or empowering an audit committee with explicit duties to assess actuarial integrity. By embedding these mechanisms in policy, the fund can avoid repeated disputes and produce more reliable, credible forecasts for funding decisions.
When a challenge is well-substantiated, consolidate the evidence into a credible inquiry that respects due process. Prepare a concise report that synthesizes data discrepancies, methodological concerns, and governance gaps identified during the review. Include a clear assessment of material risk to the funding plan and practical recommendations. Share the report with trustees, auditors, and oversight bodies, inviting written responses and a timetable for action. Maintain professionalism by distinguishing between verified issues and speculative concerns, and document every communication step. A disciplined inquiry not only corrects course but also builds a culture of accountability and ongoing improvement within the pension system.
In the end, challenging actuarial reports is about safeguarding public funds and trust. By demanding transparency, validating assumptions, and pursuing governance reforms, stakeholders can improve the accuracy of funding projections and ensure sustainability for beneficiaries. This evergreen process—rooted in evidence, cooperation, and procedural fairness—helps pension systems adapt to changing realities while upholding fiduciary duties. Through patient, data-led engagement, communities can secure fair, affordable benefits that reflect real-world conditions and responsible financial stewardship for generations to come.
