NAPF Conference: actuaries under scrutiny
Speaking on the sidelines of the National Association of Pension Funds’ event following a talk on 'evaluating actuaries: alchemy or science', First Actuarial director Hilary Salt told IPE: "I often think the advice actuaries give can be equivocal."
"There's a fear on the part of actuaries that they don't want to be in the dock as it were, they don't want to be the person that's judged." As a result, in instances of indecision, "there is often a lack of will on the part of the actuary to give it a good steer".
She added: "Actuaries are particularly nervous at the moment and one of the reasons is because special indemnity insurance is ridiculously expensive, and everyone is just a little concerned that what they do might backfire on them."
She said actuaries might also be nervous to push against the tide of increasing trustee responsibility.
"I don't think it's just because they don't want to follow a particular line; I do think they're not particularly keen to take on responsibility, which in my view, they are paid enough to take."
Norman Braithwaite, trustee chairman of the £13bn Mineworkers' Pension Scheme, criticised actuaries and investment consultants for failing to admit they are not equally strong in all asset classes.
While he added it was important for schemes not to realistically expect this in the first instance, he said: "But I also don't think investment consultants like admitting this."
It means that schemes either don't invest in certain asset classes, or they would potentially not get the right consultancy to pick the right manager for that asset class - potentially affecting scheme performance.
"I think that's true in lots of areas," said Salt. "I find it quite difficult to know how trustees will address that, because I don't think they can hire a different investment consultant just for one asset class."
Meanwhile, Institute of Actuaries president Michael Pomery outlined the findings of market research on attitudes about the profession.
According to results, actuaries are thought to be bright and technically excellent. However, they are also thought of as lacking real world understanding, business judgment and good communication.
"These didn't perhaps come as a surprise," said Pomery.
He urged trustees not to be "fobbed off" by actuaries if responses are too technical or difficult to understand. "Insist on things being explained properly," he said. "Don't put up with jargon - demand something better."
He also warned trustees to be wary when given a single answer by an actuary. "The future is uncertain," he said. Pomery also urged trustees to make an effort to learn. "It will be worth the effort," he concluded.