Partner Jane Kola comments in Pensions Expert on IFoA’s recommendations to broaden actuary role
Aiming to establish a “new paradigm” focused on member outcomes for running off the £2tn of UK corporate sector defined benefit liabilities, the working party, set up by the Institute and Faculty of Actuaries, published a report with a series of recommendations for the actuarial profession and the Pensions Regulator to take forward.
Among the many recommendations made in the report, the authors said that the role of actuaries should be broadened to include strategic advice, marking a change from the current model of technical specialist.
Jane Kola, one of the report’s co-authors, commented:
“The newly defined role will not be to fulfil all advisory functions, but rather will see actuaries tell schemes and trustees when professional advice is needed, what kind of advice, and from whom it should be sought.”
“The role of the actuary is evolving so that the actuary is put in a position where he or she is far more able to say to trustees, ‘I’m sorry, that’s an issue that requires legal advice’, or ‘this is an issue where the administrator needs to invest in the administration team, and they need to do some more work on this’. It’s about them ensuring that the advisers who need to be involved are involved, and therefore the right solution is delivered.”
Jane hailed the report as a “seminal marker, a shift-change paper, that sets the basis of actuarial practice going forward.”
She further commented that in part, the change to the actuary role is required, since for decades there has been a lack of investment in administration by trustees. This was the result of a number of legislative, regulatory and financial trends, not least the Maxwell scandals, which centralised the role of actuaries. Combined with the need to cut costs, many schemes and trustees ended up relying on their actuary when they should have been approaching other specialist advisers.
“We now need to unpick the damage done by 20 or 30 years of not necessarily having the right people involved, and trustees in particular underinvesting in administration.The result can be mistakes and bad practice, especially around data, which adversely impacts member outcomes.”
Read Jane’s comments in Pensions Expert.
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