What conflict of interest arises with pension actuaries?
A) They are compensated by the government regulatory agency for pensions
B) Employers often signal their concerns about a finding of pension underfunding
C) They are usually working directly with the auditors
D) They also work for the Pension Benefit Guarantee Corporation

Question

Quizplus · Accepted Answer

Pension actuaries are often employed by the employer or the plan sponsor themselves, which may create a conflict of interest when assessing the financial health of a pension plan. Employers may signal their concerns about a finding of pension underfunding, leading the actuary to potentially manipulate the calculations to avoid unfavorable results for the employer. The other options are not accurate as pension actuaries are not compensated by the government regulatory agency or the Pension Benefit Guarantee Corporation, and they may work with auditors but it does not necessarily create a conflict of interest.

What Conflict of Interest Arises with Pension Actuaries