Actuary Suspended One Year Over an OPEB Valuation: Both Errors Cut the Liability

Both assumption errors that cost Sing W. Lee his American Academy of Actuaries membership for a year pushed the liability the same way: down. The Academy's August 12, 2026 notice found he valued a multiemployer fund's retiree medical and life benefits by replicating a two-page template written by a retired company employee who was not an actuary. He drew a one-year suspension for materially violating Precepts 1, 2, 3, and 4 of the Code of Professional Conduct.

Key Takeaways

• 50% against an observed 61% spousal participation rate, applied "without disclosing rationale" when the plan's own demographic data sat inside the same report (American Academy of Actuaries, August 12, 2026).
• A factor of three separates four months of claims from twelve. The notice puts no dollar figure on the drug assumption, but a four-month total presented as a full year understates the annual cost by roughly two-thirds before any seasonality correction.
• 11 of 24 inquiry cases at the Actuarial Board for Counseling and Discipline in 2025 came from pension practice, the largest share of any area, against only 16 of 114 requests for guidance.
• 1,220 multiemployer health and welfare plans covering about 4.8 million members file in the United States, and 63% of them provide pre-65 retiree health benefits (Milliman, 2025).

What the Notice Found

The Precept 2 finding is the foundation. Lee performed the work while lacking, in the Academy's words, the knowledge, familiarity, and competence necessary to complete it, and he did not review the controlling standards, ASOP Nos. 6, 35, and 41, either before starting or after being told the report was deficient.

What he used instead carries the case. The notice describes him "relying on and replicating a deficient, two-page template previously prepared by a retired company employee who was not an actuary." He proceeded despite self-acknowledged doubts about his own qualification. The findings sort cleanly by the standard they implicate and by which direction they move the reported number.

Finding in the notice	Standard implicated	Effect on the reported obligation
50% spousal participation against an observed 61%, no rationale disclosed	ASOP No. 35 (demographic assumptions); ASOP No. 6, section 3.12.3(b)	Understates
Un-annualized four-month prescription drug average used as a full-year cost	ASOP No. 6, section 3.7 (initial per capita rates)	Understates
Death benefit methodology not properly modeled or described	ASOP No. 6	Direction not disclosed
Material deviation on the retirement age assumption, financial effect undisclosed	ASOP No. 41 (actuarial communications)	Direction not disclosed
Two-page non-actuary template replicated as the valuation model	Precept 2 (qualification)	Not applicable

Scale matters here. Milliman's 2025 multiemployer health and welfare study counts 1,220 such funds covering roughly 4.8 million members on 2023 Form 5500 data, 63% of them offering pre-65 retiree coverage. These are trusteed funds whose obligations are read by joint boards and their auditors, not by a state regulator running a rate review. That Lee's case is one of 11 pension inquiries among the Actuarial Board for Counseling and Discipline's 24 in 2025, against just 16 of its 114 guidance requests, says something about which practice area asks before it acts.

Two Assumptions, One Direction

Spousal participation sets how many retirees carry a second covered life. Moving from 50 to 61 spouses per 100 retirees is a 22% increase in covered spouses. Read the other way, the rate Lee used carries 18% less spousal liability than the plan's observed experience supports.

That is not a rounding item. Spouses cluster close to the retiree in age and, in the pre-65 window, generate full commercial claims cost rather than a Medicare-secondary cost. A fund where spouses are a third of covered lives would see the obligation understated by roughly 6% from this assumption alone. The notice states no dollar effect, so that arithmetic describes direction and order of magnitude, not a figure the Academy published.

ASOP No. 6 section 3.12.3(b) instructs that the actuary "should consider who is eligible for coverage under the retiree group benefits program and make appropriate assumptions regarding the coverage of dependents," pointing at historical dependent coverage rates. An actuary may reasonably select below observed experience, for instance when a scheduled contribution increase is expected to cut take-up. What converts a defensible selection into a Precept 3 finding is the absence of a stated basis. The 61% was inside the report he signed.

The drug assumption compounds differently. Initial per capita claims cost is the base every projection year compounds against, so an error there scales the entire discounted obligation before trend enters. It is a permanent multiplier, not a timing difference that washes out.

Four months booked as twelve understates by two-thirds, an annualization factor of 3.0 that was never applied, and seasonality runs the same direction. Plan-paid pharmacy spend is lowest early in the year because deductibles reset on January 1 and members pay full cost in the deductible phase, a pattern Drug Channels has tracked as deductible-driven seasonality in dispensing. Even a correct multiplication by three would land short.

The Credential That Did Not Cover the Work

Lee carries ASA, FCA, EA, and MAAA designations. The Enrolled Actuary is the credential with statutory teeth, and it gates defined benefit pension funding certifications under ERISA. No equivalent gatekeeper stands in front of a multiemployer fund's retiree health valuation. The qualification test there is self-administered under the U.S. Qualification Standards, which makes the actuary the judge of whether the assignment is inside their competence. That control failed first, and the notice records that he proceeded while doubting the answer himself.

The standard he did not read is meanwhile being rewritten in the two places he got wrong. The Actuarial Standards Board's proposed revision of ASOP No. 6, exposed in November 2025 with comments closing May 15, 2026, adds a section expanding dependent coverage guidance to require consideration of initial eligibility, remarriage rules, age limits, historical experience, contribution rates and gender effects. Another proposed section would require the actuary to request claims data whether or not the plan is insured.

A tighter standard reaches an actuary who opens it. It does not reach this failure mode. The 2015 version already directed the actuary to historical dependent coverage experience and to claims periods adjusted onto comparable bases, and the finding is not that ASOP No. 6 was ambiguous but that he never reviewed it.

Which leaves the review chain. The observed 61% was printed on the fund's own pages, two decisions away from the 50% the model ran on, and a four-month claims window sat in the same file as the annual cost it was meant to support. Both contradictions were internal to the document and visible to anyone reading it end to end. The report cleared the trustees, the administrator, and whatever review the fund had in place before a complaint reached the ABCD. There is no ASOP for that control.

Further Reading

• Milliman's 2026 Index Puts Retiree Health Savings at $418,000 - What the per-retiree cost of post-employment health coverage actually looks like when it is measured properly.
• The 2026 ASOP Update - The standards calendar behind the exposure draft rewriting the retiree benefits guidance.
• Multiemployer Pensions Reach 106% Funded at Midyear 2026 - The retirement side of the same trusteed multiemployer fund universe.
• Machine Learning in Loss Reserves and the ASOP Compliance Gap - Another case of documented method running ahead of documented compliance.
• SOA Actuarial Exam Changes in 2026 - The credentialing pathway that sits upstream of every qualification judgment.