A pinch of actuarial salt.
Mike Harrison is for my money a pension expert and has every right to rattle my cage.
I’ll keep reading your stuff, Henry, as I like your pro-member stance, but if you’re not a DB expert and haven’t read TPR’s consultation document I’ll take your views on scheme funding with a slightly larger pinch of actuarial salt.
— Mike Harrison (@HigherEdActuary) May 29, 2020
I had earlier owned up to not having read the full 175 pages of TPR’s DB funding consultation (published March 3rd) preferring the 16 paged “quick guide”. I would argue that I made it down the mountain but took the cable car not the black run!
Have you read through @TPRgovuk’s 175 page consultation document on DB funding, Henry?
It is really well written, intellectually coherent and still provides lots of flexibility.
— Mike Harrison (@HigherEdActuary) May 29, 2020
Each week I publish a round up of the C19 Actuaries reading. They are rather gentler on the amateur reader
TPR’s consultation and the wider context
As an enthusiastic amateur in actuarial matters, I don’t expect to be admitted to the inner chamber where white hot actuarial analysis is performed. But I defend my right to comment on the outcomes of their thinking.
The debate kicked off by tPR on March 3rd has been superseded by much larger debates on how we support the UK economy, our health service , our care service and most relevantly of all, the livelihoods of generations of working people who are facing unemployment.
It is helpful for those focussed on the particular to be reminded that the balance between the interests of pension sponsors, members and the PPF needs to be considered in the wider context of what is happening to ordinary people. In this, the enthusiastic amateur has the advantage of not having too intense a focus. So I would challenge Mike’s assertion that he’ll take my views with “a slightly larger pinch of actuarial salt”.
A large packet of actuarial fudge!
Sadly I have recently finished a large packet of very excellent fudge brought me by David Hare ( an eminent actuary). David brings the packet when he visits (sadly too rarely these days) and it’s intended as a peace offering before he whacks me in the solar plexus with some actuarial rabbit punches.
David’s superior grasp of numbers is matched by a superior sense of humour. I prefer his actuarial fudge to Mike’s actuarial salt but that’s because I have a sweet tooth. But whether it’s from David’s intestinal digs or from Mike’s haymakers, I get a constant intellectual battering from the profession.
The enthusiastic amateur
We’re forever being told that pension is complicated. It is so complicated that the enthusiastic amateur struggles to get to grips with any part of it before being warned off. In retail pensions the warning is usually to go and see a financial adviser (who doesn’t usually want to see you). In institutional pensions the phrase is some variant on “that’s down to the expert” which usually means down to the actuaries.
I am happy to sit at the feet of the COVID-19 actuarial response team and understand my Rs without getting the elbow, but I struggle with much of the actuarial science behind pensions which has created an exclusive consensus that brooks no challenge. Mike is not part of that consensus but he needs to keep perspective.
Just because you haven’t read the 175 page consultation, doesn’t mean your views aren’t valid. Those outside the actuarial sanctum – including Con Keating and Iain Clacher, may even be right!
“It is really well written, intellectually coherent and still provides lots of flexibility.” writes Mike Harrison of TPR’s consultation document(s). Mr Harrison is presumably a Mercer partner based in Leeds?
Jon Spain, once of GAD, has written briefly on your blog, Henry, about the GAD paper (another 40 pages) which accompanies the TPR consultation, and now the Clacher & Keating article in Professional Pensions addresses the whole. We need more of such peer review, critique, not mere assertions in support like Mr Harrison’s.
Your own comment yesterday speaks volumes to me: “….. look at an alternative to the wasteful system of [triennial] valuations [with annual or monthly or even daily updates] and complex de-risking strategies that characterise DB funding, then [DWP] should seriously consider the [Clacher & Keating] alternative.
“To do so would be to challenge massive vested interests within the funds and consultancy businesses that make up a big chunk of the pension industry ….”
Mr Harrison writes of “flexibility”, and TPR representatives have also used these words in the past without appearing to mean them, if war stories from some trustees are to be believed.
The very first question in TPR’s consultation response document (another 62 pages to add to the afore-mentioned 175+40) asks about “introducing objectivity” into a scheme-specific funding regime. Does Mr Harrison not realise that tone seems to me to be rebuking his own profession’s efforts to date for failing to be “objective”? Is that really the case?
George, I understand that Con and Iain are pressing on, despite considerable discouragement on social media, with their plan to make the DB consultation a meaningful debate. I have written that I don’t see any point in having a consultation if tPR and DWP already know the answer. But will radical ideas like those of Clacher and Keating get a hearing? Or will the future be the dystopian pension austerity proposed by John Ralfe in the Times?