7 Factors to Consider When Hiring an OPEB Actuary

September 21, 2021|Kirby Prigioni

An actuary and a town treasurer sitting at a computer studying an OPEB valuation
  • There are 7 factors to consider when hiring an OPEB actuary
  • The factors include expertise, plain english, timing, auditor support, plan design, prefunding & OPEB trusts, and cost
  • No matter the actuarial firm you choose to do your OPEB valuations, you should be confidant that they understand your entity’s needs, both present and future, and that they care about your long-term success.

An actuary and a town treasurer sitting at a computer studying an OPEB valuation

Are you ready to start reconsidering your OPEB valuation options? If so, here’s a checklist of some things to consider when looking for an OPEB actuary; after all, it’s not as easy as just, “Do they do OPEB valuations?” anymore.

Expertise

Of course, most actuaries know the phrase OPEB, but how many really understand it? You want someone with significant experience and expertise in the subject, especially now that GASB 74/75 has been around for a few years.

  • How many OPEB valuations have they performed? A good sign is that they’ve performed 100+
  • Are they up-to-date and compliant with all the accounting standards? Do they have any whitepapers they’ve written?
  • Have they worked with municipalities or organizations similar to yours? Can they offer references for you to speak with?

Plain English

Now that you know they have the expertise and the ability to perform OPEB valuations, will you be able to understand the report that they deliver? OPEB is likely something you only deal with once or twice a year and some of it can be pretty complex, so it’s important that your actuary is able to explain it in easy-to-understand terms to both you and your stakeholders. Consider taking a look at some of their past presentations or have them walk you through a report they’ve done recently.

Timing

This one’s pretty basic, but still very important. Can you count on them to deliver their valuation when you and your auditor need it? What’s their typical turnaround time?

Audit Support

Financial Statement reporting seems to get more intense and complicated every year. Given that, it makes sense to ensure your actuary can support the auditors to limit the time and resources you need to spend. Will your actuary’s report facilitate a smooth financial statement closing? Does it contain all the required information? Ask your auditors for their feedback about the actuarial firms you’re considering.

Plan Design

OPEB liabilities are likely one of the biggest items on your balance sheet. Does your actuary offer suggestions on how to mitigate or manage this liability? Ask them for examples of how they’ve supported other groups with their liabilities.

Pre-funding & OPEB Trusts

Many entities are choosing to pre-fund their OPEB Trust. Even if this isn’t something your entity is currently doing, you should consider if your actuary understands how this impacts the disclosed OPEB liability. Can they present various alternatives that meet any current or future budgetary constraints?

Cost

Last, but certainly not least, is one on top of everyone’s mind: the cost. Nobody wants to overpay for an OPEB valuation, especially if you’re a public entity. Make sure your actuary has a clearly defined fee structure, and won’t surprise you with a fee for the roll-forward or interim year valuation. We break down what goes into determining the cost here so you can make sure their fees are reasonable.

No matter which actuarial firm you choose for your OPEB valuations, you should be confident that they understand your entity’s needs, both present, and future, and that they care about your long-term success. Even if you don’t choose Odyssey Advisors, we’re here if you have any questions about your OPEB plan.

Categories: GASB 75, OPEB