National Disability Insurance Scheme—Rules for the Scheme Actuary 2013

Scheme Actuary. The Rules do not define this term, but section 180A of the NDIS Act provides for the appointment of an actuary by the Board. The Rules give content to that role. The actuary is not an employee of the Agency; the role is independent, with duties to report to the Board and to advise the Agency. The actuary’s core function under the Rules is to opine on financial sustainability, but the instrument goes further by requiring proactive advice on process design, data verification and professional standards.

Annual financial sustainability report. Defined in section 9 of the NDIS Act, this is the central document the actuary must produce each year. Part 3 (sections 8-12) prescribes its compulsory contents. The report must contain a general assessment, a review of recent experience, long-run projections (including cashflows and net present values as a percentage of GDP), comments on administrative infrastructure and risk management, and any other material matters. The report is not a public document by default, but must be provided to the Board.

Risk management arrangements. Defined in section 3 as “all of the systems, structures, cultures, processes, policies and people that identify, assess, mitigate and monitor all sources of risk, both internal and external, to financial sustainability.” This is an expansive, holistic definition that captures not just formal risk registers but also organisational culture and people. The actuary must discuss these arrangements in the annual report and comment on their adequacy (section 11). This is a significant intrusion into the Agency’s internal management, subject to actuarial scrutiny.

NDIS financial sustainability. Nowhere defined explicitly, but it is the touchstone for the actuary’s duties. Section 4(1) says the actuary must advise on processes to allow the actuary to be satisfied that the NDIS is financially sustainable. Section 8 requires an overall assessment of financial sustainability identifying key risks and issues. The Rules therefore leave the concept largely to the actuary’s professional judgment, but tie it to the detailed quantitative projections required in section 10. Sustainability is implicitly assessed against long-run expenditure as a percentage of GDP and net present values.

Quarterly future expenditure report. A separate, shorter report required at least once per quarter under section 5, comparing actual experience with earlier projections and commenting on changes. This creates a continuous monitoring cycle, not just an annual snapshot. The quarterly report goes to the Board, providing a regular governance check.

The Rules directly affect three parties: the Scheme Actuary, the National Disability Insurance Agency (Agency) and the Board of the Agency. The actuary must comply with the duties; the Agency must make arrangements to enable the actuary to perform those duties, including providing data, information and access to persons (National Disability Insurance Scheme Act 2013, section 180F). The Board receives the quarterly and annual reports and presumably acts on recommendations. Indirectly, the Rules affect NDIS participants, providers and taxpayers. The actuary’s advice on processes - consistency of access decisions, resource allocation across regions, cost and outcome variation across providers - shapes how the Agency designs and runs the Scheme. If the actuary recommends tighter controls on access criteria or plan budgets to improve sustainability, participants may face more restrictive eligibility or smaller support packages. Providers may face pressure on pricing or outcome benchmarks. Taxpayers bear the ultimate cost risk; the actuary’s projections and recommendations inform government decisions on funding and scheme design.

The Rules impose no direct obligations on participants or providers. However, the actuary’s reports are likely to influence policy decisions about price limits, plan flexibilities, and the role of independent assessments. For example, the actuary’s comments on consistency of resource allocation across disability types (section 4(2)(d)) could lead to standardised budget tools that reduce individual variation. The quarterly reporting cycle also means the Agency cannot wait until the annual report to respond to emerging cost pressures; the actuary’s quarterly comparisons give early warning signals that may trigger mid-year policy adjustments.

Professionally, the actuary must be a member of or subject to the Institute of Actuaries of Australia’s Code of Professional Conduct. This imports an external disciplinary framework into the NDIS context. The actuary’s independence is critical: the Rules do not permit the Agency to dictate the content of the reports, though the Agency controls data quality, which the actuary must verify (section 6(2)).

Duty to advise on processes (section 4). The actuary must advise the Agency on how processes, systems and tools relating to eight listed matters can best be developed and implemented. This is an ongoing, proactive obligation. The listed matters include access decisions, plan consistency, resource allocation, provider cost variation, outcome evaluation, research and the risk management framework. The actuary must assess whether these processes enable him or her to be satisfied that the NDIS is financially sustainable. This duty effectively gives the actuary a role in the design of the Scheme’s operational infrastructure, not merely a reporting function.

Duty to produce quarterly future expenditure reports (section 5). At least quarterly, the actuary must estimate future expenditure, compare experience with previous projections, and comment on any changes in projections. The report must be provided to the Board. There is no right to withhold or delay the report; it is a mandatory output.

Duty to advise on data needs and to verify data (section 6). The actuary must advise the Agency of the data, information and reports needed to prepare the annual and quarterly reports, and the persons to be consulted. The actuary must also take reasonable steps to verify the consistency, completeness and accuracy of data provided by the Agency and to resolve any discrepancies. This is a critical safeguard: the actuary cannot simply accept Agency data at face value. The “reasonable steps” standard leaves scope for professional judgment about the extent of verification appropriate given cost and materiality.

Duty to have regard to professional standards (section 7). In preparing the annual financial sustainability report, the actuary must have regard to the Code of Professional Conduct of the Institute of Actuaries of Australia and other relevant professional guidance. This does not require absolute compliance, but it imports professional norms into the statutory reporting. A failure to have regard to those standards could be raised in a challenge to the adequacy of the report or the actuary’s performance.

Duty to include prescribed content in annual report (sections 8-12). The actuary must include a general assessment and recommendations (section 8), a review of recent experience (section 9), long-run projections in specific formats (section 10), a discussion of administrative infrastructure and risk management (section 11), and any other material matters including tracking of previous recommendations (section 12). These are minimum content requirements; the actuary may include additional material. The projections must include cashflows and net present values as a percentage of GDP, and must include sensitivity analysis and discussion of uncertainty (section 10(f)). The actuary has a right to identify material matters beyond the listed categories.

No right to direct the Agency. The Rules impose duties on the actuary, but do not grant the actuary any power to compel the Agency to adopt recommendations. The Agency is obliged by section 180F of the NDIS Act to make arrangements to enable the actuary to perform his or her duties, but the actuary cannot force changes to processes, systems or risk management. The actuary’s influence is through the force of the reports and the response of the Board.

The Rules themselves do not create any civil or criminal penalties for non-compliance. They are a legislative instrument specifying duties, not a penal statute. Enforcement is indirect. The primary obligation on the Scheme Actuary to perform the duties in the Rules arises from section 180B of the NDIS Act, which states that the scheme actuary must prepare the annual financial sustainability report and otherwise advise the Agency on financial sustainability. A failure to comply with the specific duties in the Rules - for example, failing to produce a quarterly report under section 5, failing to include a required element in the annual report under sections 8-12, or failing to take reasonable steps to verify data under section 6(2) - would be a breach of a statutory duty under the NDIS Act.

The ordinary remedies for breach of a statutory duty by an independent office-holder are unclear. The actuary is appointed by the Board (NDIS Act section 180A). The Board could potentially terminate the appointment for cause if a serious breach occurred. The Agency could seek a declaration or an injunction from the Federal Court requiring the actuary to perform the duty, though such proceedings would be rare given the cost and publicity. For the Agency’s part, section 180F of the NDIS Act requires the Agency to make arrangements to enable the actuary to perform his or her duties. A systemic failure by the Agency to provide data or access could be raised in the annual report itself, but the Rules do not provide a penalty against the Agency. The quarterly and annual reports go to the Board, which has governance responsibility over the Agency. The most likely enforcement mechanism is political accountability: the Minister, Parliament and the public (if reports are released) can see whether the actuary has complied and whether the Agency has acted on recommendations.

The incorporation of the Institute of Actuaries of Australia’s Code of Professional Conduct (section 7) means that the actuary may face professional disciplinary action by the Institute for failing to have regard to the Code in preparing the annual report. This is a soft enforcement mechanism, but it matters to a professional actuary.

The Rules are made under section 180C of the National Disability Insurance Scheme Act 2013 (Cth). They sit within Part 5 of that Act (Division 5A, sections 180A to 180F), which establishes the Scheme Actuary function. The Rules must be read together with those provisions. Section 180B of the Act imposes the overarching duty to prepare the annual financial sustainability report and to otherwise advise on financial sustainability. The Rules flesh out that duty. Section 180E of the Act gives the actuary certain protections, including that the actuary is not subject to direction by the Minister on the content of reports. The Rules do not override that protection.

The Rules interact with the National Disability Insurance Scheme Act 2013 more broadly. The Act creates the NDIS, the Agency and the Board. The actuary’s reports under the Rules feed into the Board’s oversight function. The Rules also reference the risk management arrangements of the Agency, which are likely subject to other legal frameworks such as the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The Agency is a Commonwealth corporate entity subject to the PGPA Act, which requires proper risk management and financial sustainability. The actuary’s assessment in the annual report may inform the Agency’s compliance with its PGPA duties.

The Rules do not interact directly with the National Disability Insurance Scheme (NDIS) Price Control or other operational rules. However, the actuary’s recommendations on processes (section 4) could prompt amendments to those rules. For example, the actuary might recommend changes to the NDIS (Plan Management) Rules or the NDIS (Support Categories) Rules to improve consistency or contain costs.

There is no overlap with state disability laws except insofar as the NDIS rolls out across jurisdictions. The actuary’s projections may incorporate state government contributions under bilateral agreements, but the Rules do not reference those agreements.

The professional standards component (section 7) incorporates the Institute of Actuaries of Australia’s Code of Professional Conduct by reference. This means the actuary must stay abreast of that Code and any updates. The Code is not a legislative instrument; it is a private professional body’s standard. However, a failure to have regard to it may be relevant to a court considering whether the actuary has complied with the statutory duty.

The instrument was made on 25 June 2013 by the then Minister for Financial Services and Superannuation, Bill Shorten, and commenced on the later of the day after registration and 1 July 2013. As of the text provided, there is no indication of any amendment. The Rules have remained in their original form since commencement. This is not unusual for a machinery rule setting out duties of an appointed officer. Amendments may have been made but are not reflected in the source text. The Rules would need to be updated if the NDIS Act provisions concerning the actuary (ss 180A-180F) are amended, but as of the date of the instrument, the Act had only recently been passed (assented to in March 2013). The Rules were one of the first suite of instruments made under the new Act.

The source text does not reference any litigation concerning the Rules, and there is no widely known case law interpreting them. This is unsurprising. The Rules prescribe duties for an internal officer, and disputes about compliance are unlikely to reach court. The most plausible litigation scenario would be a judicial review challenge to a decision of the Agency that was influenced by the actuary’s report, where the applicant argued that the report was flawed or failed to follow the Rules. For instance, if the actuary recommended a change to access criteria that the Agency implemented, a refused applicant might challenge the lawfulness of that change and argue that the actuary’s report was procedurally defective for failing to include required content. The Federal Court could then consider whether the Rules were complied with. However, the Rules impose duties on the actuary, not on the Agency; a defect in the report may not invalidate a subsequent Agency decision if the Agency had independent power to make the change. Another avenue would be a merits review of a participant’s plan at the Administrative Appeals Tribunal (now the Administrative Review Tribunal), where the actuary’s projections or resource allocation data might be subpoenaed or referenced. The Rules themselves are not directly reviewable; they are a legislative instrument. No litigant has successfully argued that the Rules are invalid. The quiet litigation history likely reflects the fact that the Rules operate largely behind the scenes, influencing governance rather than directly affecting individual rights.

No statutory definition of “financial sustainability”. The Rules rely on this term repeatedly (sections 4(1), 8(a), 10(b)(ii), 10(f), 12(a), etc.) but never define it. The actuary must use professional judgment. This creates uncertainty: different actuaries could reach different conclusions on sustainability using the same data. The Rules require projections as a percentage of GDP, which implies a macroeconomic benchmark, but there is no prescribed threshold. The actuary could set a sustainability standard that the Agency or government later challenges.

Quarterly reports are not annual reports. The Rules require a quarterly report estimating future expenditure (section 5), but the content requirements in Part 3 apply only to the annual financial sustainability report. The quarterly report is less prescribed: no requirement for sensitivity analysis, no discussion of risk management, no tracking of previous recommendations. This asymmetry means the Board receives a more limited picture quarterly, which may mask emerging issues that only surface in the annual report. The actuary could choose to include additional material, but is not required to.

Data verification is “reasonable steps”, not audit-level. Section 6(2) requires the actuary to take reasonable steps to verify consistency, completeness and accuracy of data provided by the Agency and to resolve any discrepancies. “Reasonable steps” is a lower bar than a full audit under Australian Auditing Standards. The actuary can rely on Agency representations if they seem reasonable. This creates a risk that data errors or manipulation could go undetected, particularly if the Agency has incentives to present a favourable picture. The actuary’s verification is not independently audited.

Recommendations may be ignored. The actuary must include recommendations in sections 8(b), 9(d), 10(c), 10(f), 11(c) and comments on the extent to which previous recommendations have been acted on (section 12(b)). But the Rules do not require the Agency or Board to implement any recommendation. The actuary can note non-implementation in the next annual report, but there is no enforcement mechanism. Recommendations could accumulate without effect, damaging the credibility of the process.

Professional standards reference may become outdated. Section 7 requires the actuary to have regard to the Code of Professional Conduct of The Institute of Actuaries of Australia and “any other relevant professional guidance published by The Institute of Actuaries of Australia”. If the Institute changes its name, merges, or ceases to exist (e.g. if it amalgamates with a global body), the reference may become uncertain. There is no fallback provision in the Rules.

The actuary’s role in process design may create conflicts. Section 4 requires the actuary to advise on how processes can best be developed and implemented to enable the actuary to perform duties effectively. This blurs the line between independent oversight and process design. The actuary may become invested in particular systems or tools, making it harder to offer objective criticism later. The Rules do not address this potential conflict of interest.

No public reporting requirement. The annual financial sustainability report goes to the Board under section 180B(4) of the NDIS Act, and the quarterly report to the Board under section 5. There is no requirement in the Rules to publish these reports. The Board can choose to release them, or to keep them confidential. This limits public accountability. A participant, provider or researcher cannot access the actuary’s assessment of financial sustainability unless the Board or Minister decides to publish.

Compliance with the Rules is the responsibility of the Scheme Actuary, with support from the Agency. The actuary must approach the role systematically, given the multiple prescribed outputs and advisory duties.

Step 1: Establish ongoing advisory process. The actuary should, early in each appointment, advise the Agency on the matters listed in section 4(2). This is not a one-off; the duty is ongoing. The actuary should document the advice given, including on access decision processes, plan consistency monitoring, resource allocation reporting, provider cost variation analysis, outcome evaluation, research and risk management framework. The advice should be clear about how each process will enable the actuary to be satisfied of financial sustainability. The actuary should request that the Agency formally respond to the advice.

Step 2: Identify data needs and verification procedures. The actuary must advise the Agency of the data, information and reports needed, and the persons to be consulted (section 6(1)). This should be done at the start of each reporting cycle and updated as needed. The actuary should also establish a data verification protocol: what constitutes “reasonable steps” to verify consistency, completeness and accuracy. This may include sampling, cross-checking against independent sources, and requesting Agency certifications. Discrepancies should be documented and escalated to the Agency and Board. The actuary should not simply accept a data dump without scrutiny.

Step 3: Prepare quarterly future expenditure reports. At least once each quarter, the actuary must produce a report estimating future expenditure, comparing actual experience with previous projections, and commenting on changes in projections (section 5). The report must be provided to the Board. The actuary should establish a standard template covering: estimated future expenditure for the next quarter and short-term, comparison with annual report projections, commentary on deviations, and any changes to the actuary’s view of sustainability. The report should be timely; a delay could undermine its usefulness.

Step 4: Prepare the annual financial sustainability report. This is the major output. The actuary must include all content from sections 8-12. The report should have clearly labelled sections:

• General assessment and recommendations (s 8): An overall assessment of financial sustainability, identifying key risks and issues, and recommendations to manage adverse impacts.
• Recent experience (s 9): Summary of participant data, identification and comment on significant features and trends, including changes in participant numbers, characteristics, distribution of support package costs, participant outcomes, Agency operating expenses, total cost, deviations from expected experience, other relevant experience (including innovative approaches). Also comment on steps taken by the Board and senior management to address deviations, and any recommendations.
• Projections (s 10): Best estimates of future expenditure on care and support as cashflow projections over the long run in dollar terms and as a percentage of GDP; lifetime cost of care and support to standardised new entrant cohorts as net present values in dollar terms and as a percentage of GDP; future expenditure on care and support to current participants assuming no change in scheme design as net present values. Discuss changes since previous projections, reasons, implications. Provide recommendations for adverse changes. Justify methodology and key assumptions. Comment on extent assumptions are based on historical experience and reasons for any changes. Provide a practical discussion of uncertainty including sensitivity/scenario analysis, main drivers, and recommendations for managing uncertainty.
• Administrative infrastructure and risk management (s 11): Discuss the Agency’s administrative infrastructure, processes and risk management arrangements. Comment on adequacy of decision support tools, data and information systems, processes for monitoring and responding to adverse movements. Provide recommendations for inadequacies.
• Other material matters (s 12): Identify any other matters material to financial sustainability. Comment on the extent to which previous recommendations have been acted on by the Agency.

The actuary should maintain a record of previous recommendations to comply with section 12(b). The report must have regard to professional standards (section 7). The actuary should document which parts of the Code were considered and why.

Step 5: Maintain independence and manage conflicts. The actuary should avoid becoming so involved in Agency operations that independence is compromised. Where the actuary has advised on process under section 4, the annual report should still provide an objective assessment of those processes. The actuary should disclose any relationships that could affect impartiality.

Step 6: Coordinate with Board and Agency. The actuary should ensure reports are delivered to the Board as required. The Agency is obliged to make arrangements to enable performance of duties (NDIS Act s 180F). The actuary should request a formal service agreement specifying data delivery timelines, access to personnel, and response to data verification requests. If the Agency fails to comply, the actuary should note this in the annual report and may raise it with the Board.