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An actuarial report is a statement on the current and future conditions of a fund, like a pension or insurance pool to determine whether it is on track to meet the needs of people depending on it. In the case of public funds like pensions for government employees, actuarial reports are available to members of the public on request. Privately-held funds have internal reports that may not be accessible. This depends on the fund and the company's status. In the case of a publicly owned company, actuarial reports may be part of the public filings the company must make to comply with regulators.
This document must be prepared by an actuary. Actuaries have special training in evaluating risks, compiling statistics, and evaluating demographics. The actuary will look at the stated purpose of the fund and collect information about the contributors to develop an opinion on how much money the fund needs and the amount it will have if contributions and disbursements follow expected patterns. Looking at public employee pensions, for example, an actuary would see the amount current employees deposit into the fund, how much the fund earns through investments, and what it pays out to currently retired employees who are entitled to benefits.
The actuarial report will make projections about future performance on the basis of the available data. An actuary may note, for example, that a boom in retirees may have a negative impact on a pension fund and could create a situation where there is not enough in the fund to meet the need. An actuarial report may provide suggestions on addressing issues it identifies. They can also evaluate the outcome of losses and bad investments to help the fund administrators develop a plan for stabilizing the fund.
Actuaries need as much information as possible to develop accurate and complete actuarial reports. This includes detailed data on projected future needs. If this information is not correct, the statement may be inaccurate, and it will be less useful to administrators, investors, and concerned members of the public. Actuarial reports can be valuable documents when they are accurate, as they may offer warning signs about economic problems that are not visible yet, but will become an issue in the future.
A fully complete actuarial report will bear the signature of the actuary who prepares it. By signing, he indicates the accuracy of the document and testifies that the information is as complete as possible. If information in the actuarial report is fraudulent, there may be legal penalties.
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