Scrutinise the Actuarial Numbers and It's Endgame for the Fiduciary Duty / Regret Risk Psyche Out of Trustees

Scrutiny of actuarial numbers – it has taken 250 years to reach the pilot stage.  But suddenly it matters.  £50 billion a year is being syphoned off by wily life insurers from DB pension schemes.  But look at the numbers and it does not make financial sense for members, many sponsors or the economy.  So what. Fiduciary duty and regret risk anxieties keep trustees in thrall to the risk transfer industry.  But now Government regulations require a bulk transfer against run-on comparison and the results have to be available.  A maths-based risk-benefit analysis is a great therapy to deal with incessant consultant use of fiduciary duty and regret risk to sell FUD based plans. (Fear: Uncertainty: Doubt.) 

Ask the relevant question of the actuary, “where are the numbers?”  Numbers count and tell stories.  Actuaries will realise they need to know what are the probabilities of less and more?  What can be done to influence the calculations?  What will upcoming Government action do to change the analysis?  What are the credible alternatives to get rid ASAP of which Government speaks?

And what follows from scrutiny of actuarial work?  Better pensions for past and present employees.  And with long termism re-established there is more money for UK productive investments to help the growth agenda.  That is something Government can encourage by linking incentives on risk reduction and the exercise of discretion to asset allocation.
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No need for informed trustees to fold.  Work up a package of proposals which takes your members’ best interests into account in the context of an appreciation of all stakeholders’ position. That enables you to work within the existing fiduciary duty legislation and enables you to address regret risk because the decision was based on the best available data.  Time for some activism.  The ARGA Bill should finally give a statutory back up this year to the scrutiny of actuaries’ work.  But there is no need to wait.  They have already Technical Actuarial Standards with which they must comply.  You are entitled to the evidence.

​What is the maths behind the risk-benefit analysis for sponsors and members of bulk transfers in comparison with running-on?”

Small cog changes in DB scheme strategies can have a major gearing benefit for all stakeholders and increase UK productive asset allocations.

See our Concrete Proposals for Growth

​We are all scrutineers now.  As soon as the actuaries realise Government and scheme members are on the case expect some rapid repositioning.