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## (e) Expenses 

<img src='content_image/283003.jpg'>

## (f) Actuarial assumptions and methods 

The effective date of the actuarial report on the policy liabilities and solvency reserves is 30 June 2012. The actuarial report for IOOF Ltd was prepared by Mr Andrew Mead, FIAA, and was dated 15 August 2012. The actuarial report indicates that Mr Mead is satisfied as to the accuracy of the data upon which the policy liabilities have been determined. 

## Actuarial Methods 

Policy liabilities have been calculated in accordance with relevant actuarial guidance issued by the Australian Prudential Regulatory Authority under the Life Insurance Act 1995. Policy liabilities are based on a systematic release of planned margins as services are provided to policyholders and premiums are received. 

## Processes used to select assumptions 

## Mortality and Morbidity 

All mortality and morbidity risk is fully reinsured and the gross risk to the Group is low. The mortality and morbidity assumptions have been taken to be equal to the reinsurer’s mortality and morbidity assumptions. 

## Other Assumptions 

In adopting the accumulation method to assess the policy liabilities, one material assumption is required. It is assumed that the future overall experience as to expense levels, surrender/lapse rates and discount rates will likely remain within a satisfactory range so that the policies produce future profits for the business. In which case, there is no need to set aside provisions, in addition to the accumulation amounts, for future losses (i.e. there is no loss recognition concerns for the business). This assumption has been adopted on the basis that, based on the current actual experience of the business, the policies are producing satisfactory profits for the business and there is no circumstances known that would indicate that the current position (i.e. general experience levels and ongoing profitability) will not continue into the future. 

## Sensitivity analysis 

The policy liabilities are not sensitive to changes in variables within a moderate range. Increases in mortality and morbidity assumptions will result in an increase gross policy liabilities for IOOF Ltd, however as the mortality and morbidity risk is fully reinsured any change in these assumptions would be consistent with the reinsurer’s assumptions and the net change in policy liabilities would be nil. 

## Solvency requirements 

Solvency reserves are required to meet the prudential standards determined in accordance with Prudential Standard LPS 2.04 “Solvency Standard” issued by the Australian Prudential Regulatory Authority under Section 65 of the Life Insurance Act 1995. Solvency reserves provide additional protection to policy holders against the impact of fluctuations and unexpected adverse circumstances on the Company. 

## (g) Disclosures on asset restrictions, managed assets and trustee activities 

## (i) Restrictions on assets 

Investments held in life statutory funds can only be used in accordance with the relevant regulatory restrictions imposed under the Life Act and associated rules and regulations. The main restrictions are that the assets in a life statutory fund can only be used to meet the liabilities and expenses of that life statutory fund, to acquire investments to further the business of the life statutory fund or as distributions when solvency, capital adequacy and other regulatory requirements are met. 

## (ii) Managed Funds and other fiduciary duties 

Entities in the IOOF Holdings Ltd Group, including the IOOF Ltd Benefit Funds, hold controlling investments in managed funds. A subsidiary of the company is the Responsible Entity for these managed funds and has a fiduciary responsibility for managing these trusts. Arrangements are in place to ensure that such activities are managed separately from the other activities of the IOOF Holdings Ltd Group. 

