Although financing policy varies by social security institution, many systems will have reserve funds that require effective management, whether these have a short or longer term time horizon. As populations age and the external investment environment becomes more complex, the importance of a well-managed reserve fund increases. Increasing focus on investment governance is likely to continue and professionals involved in the investment process need to ensure that their input is carried out appropriately.

The actuary has an increasingly important role, in cooperation with other professionals, in the management of reserve funds. The actuary is also likely to be involved in a number of different areas relating to the investment process. It is important that any analysis is undertaken using generally accepted actuarial principles, in particular in relation to methodology and assumptions used in any calculations. Proper peer review processes should exist, and working closely with other professionals in the investment governance process, communication and reporting as well as other areas of the investment process where actuarial input is sought will be essential. Actuarial input into the appreciation of risk and its impact on the investment activities of the institution is also likely to be valuable. The investment function of the social security institution should always take into account actuarial opinion and input on relevant issues and there should be regular and close cooperation between departments as appropriate. The investment policy and strategy should be set in accordance with the liability profile of the scheme (see Guideline 22) and there should be close collaboration between the investment function and those responsible for the actuarial valuation.

The ISSA Guidelines on Investment of Social Security Funds covers issues relating to the investment governance process, and many of the guidelines and supporting resources will be relevant to actuaries involved in the investment process. Explicit reference is made to these investment guidelines in this part where appropriate. Actuaries involved in the investment process are also advised to consult other relevant documentation highlighted in this part. Appropriate coordination and collaboration with other staff involved in the investment process is also critical.

Actuarial input may also be desirable or mandated in other areas including the monitoring and regulation of supplementary funded provision, system adequacy projections, costing of certain systems and benefit factor calculations. In such cases, appropriate assumptions and methodology to assess current values and project appropriately future estimations of asset value should be used. This should seek to ensure that actuarial input is not only appropriate but that the approach is consistent with other areas of actuarial input (most notably regarding methodology and assumptions).