CA3: CMP Upgrade 2013/14 Page 1

Subject CA3
CMP Upgrade 2013/14

CMP Upgrade

This CMP Upgrade lists all significant changes to the Core Reading and the ActEd
material since last year so that you can manually amend your 2013 study material to
make it suitable for study for the 2014 exams. It includes replacement pages and
additional pages where appropriate. Alternatively, you can buy a full replacement set of
up-to-date Course Notes at a significantly reduced price if you have previously bought
the full price Course Notes in this subject. Please see our 2014 Student Brochure for
more details.

This CMP Upgrade contains:

all changes to the Syllabus objectives and Core Reading.

changes to the ActEd Course Notes, Series X Assignments and Question and
Answer Bank that will make them suitable for study for the 2014 exams.

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1 Changes to the Syllabus objectives

1.1 Syllabus objectives

No changes have been made to the Syllabus Objectives.

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2 Changes to the ActEd Course Notes

Section 1.6: The CA3 Exam

This section has been updated to reflect development of the practical exams. The
section now reads as follows:

Currently, about 8 weeks before your exam you will be given access to the professions
CA3 Online application. This will given you access to pre-exam material and the
online elements of the practical exam.

The exam will consist of two parts:

1. A written piece of communication: eg a draft letter, memo or report. You will be
required to create your draft using Microsoft Word.
2. A practical presentation involving the design of a 5-10 minute presentation
(including slides) and its (oral) delivery. You will be required to create your
slides using Microsoft PowerPoint and Excel.

It may be that you can complete the whole exam at a distance via the online
application provided by the profession. Alternatively you may have the option to attend
an exam centre in person. Please refer to the professions website to determine which
option(s) is/are available to you.

If you are completing the exam using the online application you will need to draft a
written document, create slides and subsequently deliver your presentation under timed
conditions. You will need a webcam to record the presentation component of the exam.

Section 3: The drafting process

This section has been updated to present a simplified process (based on storyboarding),
which is more suited to drafting communications using a computer. The Section is
reproduced in full towards the end of this document.

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3 Changes to the X assignments

Where calendar years are referenced in assignments X3.1, X4.1 and X5.2 they have
been rolled forward by one year.

The transfer value bases underlying the figures in X1.2 have been updated. In addition
to changing the transfer values, the wording of the question has been changed slightly.
Although the transfer values have changed, the relationship between them has been
maintained so the key messages in the solution are unchanged. The updated question
is reproduced at the end of this document.

There are no other material changes to the X assignments.

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4 Other tuition services

In addition to this CMP Upgrade you might find the following services helpful with
your study.

4.1 Study material

We offer the following study material in Subject CA3:

ActEd solutions with exam technique (ASET)
Mock Exam A
Mock Exam B.

For further details on ActEds study materials, please refer to the 2014 Student
Brochure, which is available from the ActEd website at www.ActEd.co.uk.

4.2 Tutorial, Online Classroom and Mock Exam

We offer the following in Subject CA3:

a Preparation Day (1-day tutorial)
the Online Classroom
a Mock Exam Day (which uses Mock Exam A, above).

For further details on the above, please refer to our latest Tuition Bulletin, which is
available from the ActEd website at www.ActEd.co.uk.

4.3 Marking

You can have your attempts at any of our assignments or mock exams marked by
ActEd. When marking your scripts, we aim to provide specific advice to improve your
chances of success in the exam and to return your scripts as quickly as possible.

For further details on ActEds marking services, please refer to our Student Brochure,
which is available from the ActEd website at www.ActEd.co.uk.

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5 Feedback on the study material

ActEd is always pleased to get feedback from students about any aspect of our study
programmes. Please let us know if you have any specific comments (eg about certain
sections of the notes or particular questions) or general suggestions about how we can
improve the study material. We will incorporate as many of your suggestions as we can
when we update the course material each year.

If you have any comments on this course please send them by email to CA3@bpp.com
or by fax to 01235 550085.

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 CA3: Course Notes Page 17

3 The drafting process

In a CA3 exam you will need to draft two pieces of communication from scratch. One
will be a document (eg letter, memo, email, report) and the other will be a presentation.

Many students are bewildered about how to tackle a CA3 exam question. There is no
simple advice that will work for all students. However, when drafting such
communications under exam conditions it is helpful if you can apply a tried and tested
method that works for you. One possible approach is described in this chapter.

3.1 The importance of planning

I often find that students do not spend enough time planning. In the earlier actuarial
exams, it can be tough to finish within the time available and so many students like to
get writing as soon as they can. This can be counterproductive in CA3. Students who
plan their answer carefully often find that they can produce a draft more quickly as a
result because they are much more focused on what they need to communicate.

There are several different approaches to tackling a CA3 question. The approach
described in the next section should ensure that you spend an adequate amount of time
planning your answer and can be used very efficiently when drafting a document or
presentation on a computer.

We recommend that you use this disciplined approach when you practise drafting
answers to exam-style questions. By the time of the exam, you should be accustomed
both to the process and to spending a sufficient amount of time planning.

3.2 An approach RASER

There are five steps to follow when producing your answer:

1. R Read
2. A Ask
3. S Storyboard
4. E Expand
5. R Review

Each of these steps is important. Skipping over any of them could easily result in
failure.

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Read

Start by reading the question to get a good overview of the situation. Dont jump to any
conclusions about what the answer is. Just get a feel for:
the characters involved
the broad thrust of the topics covered, and
the type of communication that you are required to draft.

Ask

Read the question again and answer the following fundamental questions:
Who?
With whom am I communicating?
Why?
What are my objectives in communicating? What do I want to achieve?

Do not rush this step. It is one of the most important steps in the process of
communicating. If you are absolutely clear about the Who? and the Why?, the drafting
will flow more easily. Do some role-playing and think yourself into the specific
situation described in the question. You will usually be an actuary with a particular role
or responsibility. Therefore, you should answer these two fundamental questions while
imagining you are that actuary.

One general feature of CA3 questions is that the piece of communication usually has
only a very few objectives there may be just two or three key issues to address.

Storyboard

The objective of this step in the process is to take the answers to the two questions in
the prior step (Who? and Why?) and use then to answer a third question:
What?
What are my key messages? What points do I need to get across to in order to
achieve my objectives?

The storyboarding process has two stages:

1. First, titles are developed for each scene in the story you want to tell.
2. Second, themes that may feature in each scene are identified and sequenced.

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In both stages, there are two things to think about:

(i) Content
You might develop potential content by using techniques such as brainstorming
or mind-mapping. These techniques are described in Section 23 of these notes.
(ii) Sequence
In the first stage of this process you need to put the scenes into an appropriate
order. In the second stage you need to put the themes within each scene into an
appropriate order. In Section 4 of these notes we will consider how to structure
content so as to give it a logical flow.

You should concentrate on identifying the points you want to make and optimise their
sequence, rather than get too distracted by which precise words you will use. One way
to do this is to develop a short bullet phrase for each theme that you plan to include.

Example

A story-board for a communication aimed at the organisers of an office Christmas-party

might start to develop along the following lines.

Stage 1 develop the scenes and sequence them so as to have a logical flow

We might develop ideas for potential scenes using brainstorming or mind-mapping. The
list of ideas would then be edited and sequenced. The result might be:

1. Scenes:
introduction
responsibilities
venue
theme
delegates
logistics on-the-day
summary.

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Stage 2 themes are identified for each scene and then sequenced

For example, for the venue scene, the themes identified might be:
cost / budget
location
facilities.

The chosen sequence for these themes (above) was based on priority as the main
limitation is budget, the second priority is a convenient location etc.

The story board might continue to develop to become:

Introduction Responsibilities Venue

Purpose of Xmas Venue Location
Treaty
party specifies maximum level of cover = 45m
Theme Facilities
Role of organiser Delegates Cost
On the day etc
etc
Theme Delegates On the day
Non-duplication Who Checks20%
Fancy dress Invitations Health and safety
issues 33.3%
etc etc
etc
100%

Once the scenes and themes have been identified. The storyboard would continue to
develop as each theme is expanded to become a bullet phrase that describes precisely what
that theme aims to achieve.

As you are producing the storyboard, keep considering:

the needs of the reader(s) Who?
the objective(s) Why?

Make sure that you filter your initial ideas so as to only include the points that the
recipient will want or need to read. It is tempting to tell the recipient everything you
know about a subject! If you fall into this trap, the key issues may be obscured by
irrelevant detail and, in the exam, your time-pressure problems will be worse.

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One specific part of this process is to decide whether or not one or more numerical
examples, graphs or tables should be included. Section 6 considers the characteristics
of a good example and how best to present one graphically. However, whilst
storyboarding you should simply identify where one of these features might be helpful.
Final decisions as to which (if any) should be included, and their details, can be decided
at a later stage.

Expand

You can now begin drafting by deciding what you will include in your document or
your slides in respect of each theme you have included in your storyboard.

If you are drafting a written communication then a theme (or group of related themes)
may form a paragraph. If you are preparing a presentation then a theme (or group of
related themes) may ultimately form a slide.

In this way, you will develop your full draft by expanding out your storyboard. If you
are preparing a presentation then you need to draft the slides and determine what points
will form part of your narrative.

Remember to consider the readers needs in your choice of style, tone and language (see
Section 5).

Note that this is the first time in the process that we have started to draft detailed
wording. This contrasts with the approach of many less-disciplined writers, who begin
wordsmithing before they have even decided exactly what they are going to write and in
what order.

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Review

There are three different reviews that you should carry out:

1. Recipient check

You should review your proposed communication from the perspective of the
recipient:
Does it meet the recipients requirements?
Does it use terms that he or she will follow?
Is the language emotionally neutral?
Will the recipients reaction further your objective or detract from it?
Is there anything that might cause unintended offence and is it
appropriately polite?

2. Accuracy check

You should review your proposed communication as if you were a senior

actuary checking it for a colleague:
Is it factually correct?
Is it consistent with the standards and professionalism expected of an
actuary?
What comments would your manager make?

3. Grammar check

You must finally proof-read documents (including slides!) to check grammar,

spelling and punctuation. Obviously a computers spelling and grammar
checker will help, but dont rely wholly on such a tool.

Few people can do all three reviews in one go. You would need a remarkably flexible
brain to be able to do so! We therefore suggest that you carry out each separately.
(Even if using a computer spelling and grammar checker you will still need to review
the potential errors that it has identified and address them.)

During the formal exam, there may not be much time to correct a major problem. That
is why planning is so important.

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Question 2

Explain why filtering ideas before including them in your storyboard is important. Why
do you think many candidates find this step difficult?

Question 3

Set out below is a list of faults that we see from time to time in assignment attempts.
For each fault, identify which of the five steps in RASER have been missed or carried
out poorly.

1. too much jargon

2. poorly structured
3. tendency to waffle
4. unbalanced document
5. lots of grammatical errors
6. unprofessional style and tone
7. missed the point
8. too much detail.

3.3 Alternative approaches

As you gain experience in drafting communications and giving presentations you will
become more confident at using alternative approaches to RASER. Whatever approach
you develop, it must enable you to select, filter, arrange, draft and deliver the key
messages in a manner which meets your objectives.

3.4 Getting it right

The communication process does not end until the recipient has successfully understood
the message. When giving presentations, there are many ways to check that the listener
understands what we are saying we can look for furrowed brows or ask for
confirmation. Such feedback is rarely available for written communication. Thats why
careful planning, consideration of the reader and an independent review are all so
important.

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3.5 Summary

A tried and tested approach that works for you is an important tool to have in readiness
for the exam. RASER is one possible approach.

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Question X1.2

The fall in transfer values identified by Mrs Nutt (above) was due to rising yields on
Government stocks. Changes in scheme transfer values in previous years have been due
solely to changes in such yields.

You have been considering changing the mortality basis upon which the cost of any
pension in payment is calculated. Your initial proposals have been considered by the
schemes trustees. Some of the newer trustees are confused as, based on their recent
experience, they had thought that transfer values only depended on investment returns.
They have e-mailed you with this query.

Draft an 810 minute presentation to these trustees illustrating the impact of changing
the mortality and investment return assumptions. Your draft should consist of slides
plus an outline script. Your presentation should include explanations of what a transfer
value represents and how it is affected by mortality and interest rate assumptions. [50]

Notes

You can assume that the trustees will be satisfied only seeing figures for male
members (single-life pensions, no contingencies, non-impaired lives).

You may ignore the effects of mortality up to the date of retirement (for males,
this is the members 65th birthday).

Current and proposed transfer value bases include the discount rates given in the
following table:

Discount rates

Pre retirement Post retirement

Current 5.5% 4.25%

Proposed 6.25% 4.5%

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You may assume that the following figures have been seen by the trustees, are
correct and that the underlying bases are appropriate:

A B C D E
Male: TV per 10k pa Revised TV Revised TV Revised TV
age now non-increasing using new using new using proposed
pension from discount rates, mortality new basis
age 65 using but current assumptions but
current basis mortality current discount
assumptions rates
35 19,926 15,807 22,571 17,884
45 35,058 29,853 38,863 33,052
55 63,221 57,788 68,808 62,817
65 118,632 116,963 126,805 124,262

Key: (TV = transfer value)

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