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Actuarial Audit -- Phase II FINAL MPACT

Actuarial Audit -- Phase II FINAL MPACT

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Published by the kingfish
MPACT audit Mississippi Prepaid Collect Tuition program
MPACT audit Mississippi Prepaid Collect Tuition program

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Published by: the kingfish on May 01, 2013
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05/01/2013

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MISSISSIPPI PREPAID AFFORDABLECOLLEGE TUITION PROGRAM
ACTUARIAL AUDIT OF JUNE 30, 2012 PRICING CALCULATIONSAND VALUATION - PHASE IIAPRIL 19, 2013
 
 
April 19, 2013Board of TrusteesMississippi Prepaid Affordable College Tuition Program501 North West Street, Suite 1101 Jackson, MS 39201Attention: Ms. Lynn Fitch, State TreasurerRe: MPACT Actuarial AuditDear Trustees:Presented in this report are the results of Phase II of an actuarial audit of the June 30, 2012 PricingCalculation and June 30, 2012 Actuarial Valuation of the Mississippi Prepaid Affordable College Tuition Program (MPACT) performed by Bryan, Pendleton, Swats & McAllister, LLC (BPS&M). Theresults are presented in the following format:I. Executive SummaryII. Pricing ReportA.
 
Review of Assumptions and MethodsB.
 
Replication of ResultsIII. Actuarial Valuation AuditA.
 
Review of Assumptions and MethodsB.
 
Replication of ResultsIV. Other Program Considerations The purposes of Phase II of this audit are to 1) replicate the results of the current actuary based on thecurrent methods and assumptions, 2) review the appropriateness of the current methods and assumptionsand make recommendations to improve methods and assumptions, where warranted, and 3) identifyareas of the program that could be changed to enhance the soundness.For convenience, all of Phase I is included in this report. This Phase provides additional details, notincluded in Phase I for many of our recommendations. This report replaces all prior draft versions of Phase II.
 
Board of TrusteesApril 19, 2013Page 2
 This study was performed at the request of the College Savings Plans of Mississippi Board of Directors(Board). It may be shared with other interested parties only with the permission of the Board. If sharedwith other parties, it should be shared in its entirety or with just the (entire) Executive Summary section. This study was performed by actuaries with significant experience with valuing public sector retirementsystems (which closely resemble the MPACT program). There are currently no Actuarial Standards of Practice which specifically refer to pre-paid tuition plans. We have followed the guidance from theActuarial Standards of Practice on pensions due to their similar nature.We would like to acknowledge the cooperation of Mr. Michael Brister with the audit phase of this study.His cooperation was key in the successful completion of this report.It is important to remember that actuarial calculations are based on assumptions regarding future events.Future actuarial measurements may differ significantly from the current measurements presented in thisreport due to such factors as the following: plan experience differing from that anticipated by theeconomic or demographic assumptions; changes in economic or demographic assumptions; increases ordecreases expected as part of the natural operation of the methodology used for these measurements(such as the end of an amortization period or additional cost or contribution requirements based on theplan’s funded status); and changes in plan provisions or applicable law.We have developed a projection tool to model the sensitivity of valuation results to certainassumptions/experience, such as investment return and tuition increases to help the Board understandthe risks associated with such assumptions/experience. There are currently no Actuarial Standards of Practice that specifically refer to prepaid tuition plans.We have followed the guidance from the Actuarial Standards of Practice on pensions due to their similarnature.David Kausch is a Member of the American Academy of Actuaries and meets the QualificationStandards of the American Academy of Actuaries to render the actuarial opinion contained herein.GRS is independent of the plan sponsor.Respectfully submitted,Kenneth G. AlbertsDavid T. Kausch, FSA, EA, FCA, MAAAKGA/DTK:sc

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