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RFP Inquiries

Responses to inquiries from potential bidders

   Most recent questions appear first


February 19


Can I submit a response to your RFP without examples of previous work product? If I do so, will this materially affect my firm's chances of obtaining the contract?


The best work product example request in the RFP is intended to demonstrate the consulting actuarial firm's actual approach to assigned actuarial tasks and its ability to communicate actuarial information in an effective and understandable way. While submitting an incomplete proposal will not disqualify a consulting actuarial firm from the initial proposal review, the lack of a work product example for one bidder when other bidders do supply examples is likely to be at least somewhat disadvantageous for the non-submitting bidder.


February 16


Would "replication" of valuations involve a full census data reconciliation for the plan(s) involved, or using the reconciled ("scrubbed") valuation-ready census data information as provided by the plan(s) actuary?


The purpose of the creation of a reviewing/auditing consulting actuary to be retained by the Legislative Commission on Pensions and Retirement is to provide assurance that the actuarial work by the actuaries retained by the various retirement plans is accurate, reliable, and representative of best practices. It would be appropriate for the reviewing/auditing actuary, as part of a replication valuation, to undertake a review of the data consistency processes used by plan actuaries sufficient to form a conclusion on the reliability of those practices, although recurring full census data reconciliation would not be necessary.


February 6


Is the Minnesota Legislative Commission on Pensions and Retirement allowed by state law and willing to negotiate a contract with the selected actuarial consulting firm that includes a provision for a limitation of liability for the actuarial consulting firm?


The Minnesota Legislative Commission on Pensions and Retirement is not prohibited by state law to enter into a contract with a consulting actuarial firm that would provide a limitation on the potential liability of the consulting actuarial firm for work performed under the contract. The Minnesota Legislative Commission on Pensions and Retirement has no formal position against entering into an actuarial services contract with a liability limitation, but, in 2002, when the Commission retained the primary actuarial valuation production consulting actuary, the chair of the 2008 actuarial services subcommittee of the Commission, Senator Don Betzold, publicly expressed strong reservations about liability limitations in actuarial services contracts both in 2002 and 2008. A new actuarial services subcommittee remains to be appointed in 2009. Senator Betzold was reappointed by the Minnesota Senate to the Legislative Commission on Pensions and Retirement for the 2009-2010 biennium.


Is the Minnesota Legislative Commission on Pensions and Retirement allowed by state law and willing to negotiate a contract with the selected actuarial consulting firm that includes a provision for dispute resolution which is either binding arbitration or federal bench trial? ?


The Minnesota Legislative Commission on Pensions and Retirement is not prohibited by law from including an alternative dispute resolution provision in a professional-technical services contract and it has no formal position on the issue, but in 2002, when the issue arose with respect to the actuarial services contract for a primary valuation production consulting actuary, some Commission members expressed concerns about the propriety of such a provision.


Will a requirement by the actuarial consulting firm to obtain either a limitation of liability clause or a dispute resolution clause in the service contract described in questions 1 and 2 above result in a lower evaluation by the Commission staff and the Commission subcommittee reviewing the proposals? ?


The inclusion of a requirement in the proposal for a liability limitation or an alternative dispute resolution process will not cause a lower evaluation of a proposal by the Commission staff. The Commission staff will summarize proposals received in response to the RFP on a consistent basis to assist the members of the actuarial services subcommittee, but does not score or otherwise substantively evaluate proposals. The 2009 actuarial services subcommittee of the Legislative Commission on Pensions and Retirement has not yet been appointed, but liability limitations or alternative dispute resolution processes could be an item of concern for the subcommittee based on Commission deliberations over an actuarial services contract in 2002.


The RFP states that the actuary is expected to be selected by April 30, 2009 and the contract finalized by mid-May. If the contract is not in place until mid-May, how will this impact the review work expected to be performed for cost estimates during the 2009 Legislative Session? ?


Because of delays in initiating the consulting actuary retention process, the contract for the reviewing/auditing consulting actuary will not likely be executed until a date shortly before the scheduled conclusion of the 2009 legislative session under the Minnesota Constitution. As a consequence, no review of cost estimates for the regular 2009 Legislative Session likely will occur. Because of current state budget difficulties, a 2009 special legislative session is a possibility and cost estimates could be requested during a special session. The start of a special legislative session is a decision made by the Governor of Minnesota. The conclusion of a special legislative session is determined by the Minnesota Legislature.


The RFP requires that the retained actuary shall prepare an independent actuarial cost estimate for proposed pension legislation within seven days of receipt of the request. Please clarify if this is seven calendar days or seven business days. Will the Commission consider any extension of the seven day time-frame if the proposal is particularly complex and the retained actuary feels more time is necessary to complete the analysis? ?


While the Commission staff attempts to anticipate the Commission's needs for information to process pending legislation, the Legislative Commission on Pensions and Retirement may need an actuarial review of a cost estimate prepared by another actuary or an independent actuarial cost estimate that was not anticipated by the Commission staff on very short notice. A proposal in response to the RFP should indicate whether or not it is able to provide an independent actuarial cost estimate on short notice, whether the commitment of the bidder is to provide an estimate within seven calendar days or within seven business days, and what assistance it would be able to provide short of a full actuarial cost estimate in the event of a request involving complex proposed benefit increase legislation on short notice.


February 5


Under the enacting legislation, $140,000 was appropriated for the annual cost of the LCPR actuary. Can you confirm that this is the annual budget for services? If it is not, what is the budgeted amount?


Laws of Minnesota 2008, Chapter 349, Article 10, Section 17, appropriated $140,000 in Fiscal Year 2009 to the Legislative Commission on Pensions and Retirement for the cost of retaining a reviewing/auditing actuary and added $140,000 annually to the Commission's base budget as long as a reviewing/auditing actuary is under contract to the Commission. State budget difficulties for the balance of the 2009 fiscal year and projected for the Fiscal Year 2010-Fiscal Year 2011 biennium have resulted in the Commission's reviewing/auditing actuary budget for Fiscal Year 2009 being reduced by action of the Legislative Coordinating Commission by $40,000. All joint agencies of the Legislature, including the Legislative Commission on Pensions and Retirement, are expected to face budget reductions when the 2009 Legislature completes its regular session in late May 2009, but the exact magnitude of the Fiscal Year 2010-Fiscal Year 2011 biennium reduction in the Legislative Commission on Pensions and Retirement budget is not currently able to be estimated. Proposals by prospective reviewing/auditing actuaries would be most helpful if they clearly delineate the actuarial compensation required for a simple standards compliance and results reasonableness review and the additional actuarial compensation required for the replication of regular actuarial valuations and related actuarial work.


The RFP refers to the required work as parallel valuation for the three state plans. Are these required each year or can they be done on a cycle of every other year?


Minnesota has three statewide retirement systems that administer ten statewide retirement plans. The actuarial valuations for these ten statewide retirement plans are performed annually, with experience studies performed for the three largest statewide retirement plans quadrennially. The Request for Proposal anticipates a simple standards compliance and results reasonableness review for the actuarial valuations as of July 1, 2008, with replications of actuarial valuations and quadrennial experience studies starting with the July 1, 2009, actuarial valuations. Replication valuations of each retirement plan can be proposed to occur less frequently than annually or on an established cycle. The number of replication valuations annually and the frequency of replication valuations proposed will be a consideration factor for the Actuarial Subcommittee of the Commission.


For the non-state plans, is an annual parallel valuation required? If no, is an annual review required? Or can the review of these plans be done every other year?


There are three major local Minnesota retirement plans required to be reviewed/audited under Minnesota Statutes, Section 356.214. The major local retirement plans are valued annually. The same expectations for reviews and replications summarized above for the statewide Minnesota retirement plans also apply to the major local retirement plans.


January 29


Who is the incumbent reviewing/auditing actuary?


The Legislative Commission on Pensions and Retirement does not currently retain a reviewing/auditing actuary.


How long has the incumbent reviewing/auditing actuary been in place?


The Legislative Commission on Pensions and Retirement does not currently retain a reviewing/auditing actuary.


Why are the reviewing/auditing actuarial services out to bid?


The authority for the Legislative Commission on Pensions and Retirement to retain a reviewing/auditing actuary was newly enacted in Laws of Minnesota 2008, Chapter 349, Article 10, Section 9 (coded as Minnesota Statutes, Section 356.214, Subdivision 4) and Section 17.
  • From the late 1950s until 1985, the Legislative Commission on Pensions and Retirement retained a reviewing actuary, with the regular actuarial valuations, experience studies, and related work the responsibility of consulting actuaries retained by the various retirement plans.
  • In 1984, the Legislative Commission on Pensions and Retirement was mandated to retain a single consulting actuarial firm to perform the actuarial valuations, experience studies, and related work for the statewide and major local Minnesota retirement plans.
  • In 2004, the responsibility for retaining the consulting actuarial firm was transferred from the Legislative Commission on Pensions and Retirement to the administrators of the statewide and major local Minnesota retirement plans, acting jointly.
  • In 2008 (Laws of Minnesota 2008, Chapter 349, Article 10, Sections 1, 2, 7, and 8), the responsibility to retain the production consulting actuary was transferred to the statewide and major local Minnesota retirement plans individually, with the Legislative Commission on Pensions and Retirement given authority to retain a revising/auditing consulting actuary.


    • Are copies available of the following?

    1. The actuarial review for the July 1, 2007 (or latest available) valuations
    2. The actuarial review for the last quadrennial experience review
    3. An actuarial review of an actuarial cost estimate of proposed legislation
    4. An actuarial review of an optional annuity table or annuity reserve factor change
    5. An actuarial review of a prior service credit purchase payment amount determination
    6. An actuarial review of a privatization gain and loss calculation

    Since the reviewing/auditing consulting actuary arrangement is new for the Legislative Commission on Pensions and Retirement, none of the specified documents exist.


    Are fees available for the past five years for each of the following:

    1. Fixed fee for review or replication of the annual actuarial valuation reports for 13 plans
    2. Fixed fee for the review or replication of the quadrennial experience studies for MSRS-General, PERA-General, and TRA
    3. Rate per hour for review or replication of the actuarial cost estimates for proposed benefit, contribution, annual assumption, or other changes
    4. Rate per hour for review or audit of optional annuity form table or annuity reserve factor changes
    5. Rate per hour for review or audit of prior service credit purchase payment amount determination
    6. Rate per hour for review or audit of privatization gains or losses
    7. Rate per hour for attendance at Commission meetings
    8. Rate per hour for advice and counsel on pension benefit design and funding
    9. Rate per hour for special studies for the Commission

    Since the reviewing/auditing consulting actuary arrangement is new for the Legislative Commission on Pensions and Retirement, none of the specified documents exist.


    Is it preferred that out-of-pocket expenses be included in the fixed fee or hourly rate as opposed to charging such fees separately?


    The Legislative Commission on Pensions and Retirement does not have a preference, but the proposal should clearly indicate if out-of-pocket expenses are included in a proposed fee or will be charged separately.


    Is it acceptable to show separate fixed fees for review work and replication or audit work?


    Since the budget difficulties currently facing the State of Minnesota leave the 2010-2011 biennial appropriation for the Legislative Commission on Pensions and Retirement unclear at this time pending more decisions by the 2009 Minnesota Legislature, meaning that review work rather than replication/audit work may be required for a longer period than anticipated when the Request For Proposal was assembled, it would assist the Legislative Commission on Pensions and Retirement if the proposal shows separate fees for review work and for replication/audit work.


    January 26


    Would a firm consisting of six employees with two enrolled actuaries, one of whom is a fellow of the Society of Actuaries with extensive public employee plan experience, be considered to be of sufficient firm size?


    The Commission's Actuarial Services Subcommittee elected not to specify a minimum consulting actuarial firm size for bidders for the reviewing/auditing actuary contract. Depending on the volume of other consulting work that a consulting actuarial firm is committed to under contract or otherwise, and depending on the firm's computer and other technological capabilities, a very small firm could have a sufficient firm size. Any bid should address the issue of firm personnel size, client commitments, and relevant capabilities.


    Is it possible to find out how many requests were sent to potential actuarial consultants?


    Requests for proposal were transmitted by e-mail to approximately 200 actuarial consulting firms nationally. The RFP was also posted on the Legislative Commission on Pensions and Retirement website for the benefit of any consulting actuarial firm which may not have received an RFP by e-mail.



    January 23


    How did the Commission determine which firms should receive the RFP?


    The RFP was transmitted by email to approximately 200 actuarial firms nationwide. The list was derived by utilizing the published roster of attendees to the 2007 Enrolled Actuary meeting, eliminating attendees who obviously were not in private practice (i.e., governmental employees, insurance companies, manufacturing firms), eliminating associated actuarial firms lacking a Fellow in the Society of Actuaries after consulting the online Society of Actuaries directory, and eliminating firms where the Fellow in the Society of Actuaries was not indicated as having "retirement" as an area of concentration in the online Society of Actuaries directory.


    January 21


    Can a firm that does work outside of Minnesota be eligible to submit a bid?


    Location in or proximity to Minnesota is not a requirement for the reviewing/auditing actuary, but the ability to potentially consult with the Commission in person on relatively short notice during the springtime legislative session will be a consideration factor for the Actuarial Services Subcommittee of the Commission.


    Is there a minimum number of qualified personnel that the firm must have employed in order to be considered?


    No minimum firm size is a requirement to submit a bid in response to the RFP, but any bid should address the capacity of the firm to undertake reviewing/auditing duties under a contract with the Commission, since that capacity will be a consideration factor for the Commission's Actuarial Services Subcommittee in reviewing bids.


    January 20


    Would the reviewing actuary work be conducted offsite or onsite?


    The work of the reviewing/auditing actuary would not need to be conducted onsite in the offices of the Legislative Commission on Pensions and Retirement or onsite in the offices of any of the Minnesota public pension plans.


    Can any generalization be made about the length of the time commitment expected from a potential reviewing actuary?


    The work of the reviewing actuary/auditing actuary during the initial year is expected to consist of an assessment of the general reasonableness of results and of the adherence to statutory requirements and professional standards, with the work of the reviewing/auditing actuary in succeeding years expected to consist of either selective or comprehensive replications of the work of the consulting actuarial firms retained by the various public retirement plans. The extent of the time commitment needed by a bidder to conduct the reviewing/auditing function will be a major point of consideration by the Commission subcommittee reviewing submitted proposals.


    Can the percentage of expected effort related to the review/audit of annual actuarial valuations as compared to other reviewing/auditing tasks be estimated?


    While no estimate can be provided of the percentage of effort expected to be consumed in reviewing/auditing annual actuarial valuations in comparison to other reviewing/auditing tasks, the review/audit of annual actuarial valuations is likely to be the largest single expected reviewing/auditing task.


    When during the course of the year would the review/audit of annual actuarial valuations occur?


    The annual actuarial valuations prepared by the consulting actuarial firms retained by the various retirement plans are typically filed with the Commission and the Legislature during or before the first week of December annually, although there is no longer a statutory deadline for filing actuarial valuations. The review/audit of annual actuarial valuations would be most valuable to the Commission if they were completed roughly during the first half of each spring's legislative session, which would be before the end of March annually.


    Is prior experience as the actuarial component of an audit of life insurance companies considered relevant actuarial auditing experience?


    The experience of an actuary involved in life insurance company audits would appear sufficiently relevant to be noted in a proposal, although its weighting compared to other review/audit experience would depend on other bidders' review/auditing experience.