There are a lot of people making noise about releasing pension scheme surpluses in funding. Here’s the actuaries saying something that pleases everybody.
Actuaries like to think of themselves as an extension of the government and of course they have a Government Actuaries Department of the Treasury. It is encouraging that this IFoA are not throwing their arms about like a Nottingham economist I see on the TV.
But it is not enough to hand the issue to the actuaries, the trustees of the big pension schemes need to make decisions and they should not rely on the rules of pensions that have grown over the past 25-30 years.
Here is a non actuary trying to get some support on Linked in
But he’s just promoting the views of LCP who are of course actuaries (or former Government ministers!).
The debate is again very closed and many of the names that appearing are from a small group – some of whom debate on this blog.
Of course I am not an actuary nor wish to be in Government (unless asked for my views). But i think that we are at a point where our responsibility is to counter the work of others.
By “others” I mean the ABI for whom the thought of pension schemes becoming theirs , is at the heart of their business plans. The ABI will not be liking with the thought of pension schemes carrying on without buying out or in – with annuities.
It is a standard feature of a pension minister’s timetable to meet with insurers who are expert in getting time in the minister’s diary. We can’t turn on to Linked in without seeing pictures of insurance executives getting close to pension ministers present and past to demonstrate they are what matter. Many of these executives are actuaries and it must be hot in Staples Inn right now as the insurance and pension actuaries debate what the “balance” mentioned above – looks.
The insurers will try to grab the word “guaranteed” and apply it to annuities while the pension actuaries will have a different argument. Because actuaries aren’t naturally imaginative, they find speculative investments outside their mindset so I think they will be feeling a little discombobulated by the prospect of pension schemes driving forward British growth. However many will get it.
The PLSA , a third “voice” in this are nowadays funded by the support of the insurers (especially those selling Bulk Purchase Annuities). It will be interesting to see how the investment conference, now only 6 weeks away, will see actuaries parading their views. It will be easier to predict the ABI, it will be awkward for the PLSA.
Emma Douglas is an MD at insurer Aviva and Chair or PLSA. Sophie is an actuary (qualified Aon) with a consultancy job at XPS
“Awkward” is a word you’ll hear a lot in board rooms in the next few months.
It is absolutely right to call out the conflicts of interest that continue to pervade in the industry, and to highlight that the ABI is doing a great job at lobbying, unmatched by other major players in the industry.
I think it is right to call out the actuarial profession for its failures too. It’s a bureaucratic dinosaur that most members consider to be a failure, and failing them. I think actuaries are pivotal to changing attitudes within the industry. However, throwing stones at them and implying they’re incapable of it, isn’t going to help your cause, in my humble actuarial opinion.
I’ve worked with Debbie Webb, and she is a brilliant actuary and deep thinker who gets things done. If she is on board, things will get done.
The actuarial profession can/will be part of the solution. Virtually all those I have worked with are driven, clever and delivery focussed, albeit generally considered in nature or approach, with a desire to understand and follow the rules however complex {all characteristics necessary to pass those exams!!!}.
What is urgently needed is a reset on the Policy agenda toward growth, and that can only come from Gov’t and to be instilled into the Regulators too.
The profession has been shepherded into a world of fear and de-risking on pensions for 20 years now. If you dis-invest (pension investments) for 20 years on a system basis do not be surprised when your economy is not invested or performing.
If we are to have any chance of paying for public services, education and to lay the foundations to build the economy (btw, all things that future electorates will place before baby-boomer pensions), we MUST have growth. Hence, we must change the rules of the game, directing towards sustainable growth. The Profession is brilliant at following the rules of the game, and they will have an important role in providing the necessary guardrails.
Its also important to understand one’s limitations. Making models does not an entrepreneur make. And investment does not equate to growth. To both we need to add enterprise, endeavour and a lot of hardwork and risk, and here the role of the entrepreneur will be critical.
Well that’s good news – sorry Debbie!
I will repeat the points I made in my submission to last year’s consultation and which you repeated and contextualised in your blog, Henry https://henrytapper.com/2023/10/25/why-have-a-surplus-distribution-plan-peter-cameron-brown/ .
What has surprised me in my subsequent discussions with companies and their FDs, albeit tending towards smaller companies in the not for profit sector, is a lack of enthusiasm for a one off surplus refund from their pension scheme, even if that was to be possible. They are far more focused on the future on going operation of their companies and how their employment costs can be controlled while recruiting and retaining the experienced and highly skilled staff that they require to sustain growth in their business..
If a pension scheme surplus is distributed to the employer who then immediately pays it out to their shareholders by way of dividend, or worse still a share buy back, is that contributing to economic growth?