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The Actuary The magazine of the Institute & Faculty of Actuaries
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John Shuttleworth

At a time when actuaries are castigated for lack of communication skill, John stood out as a rare exception, as demonstrated by the following extracts:

  • It is the secret wish of all journalists to live in troubled times. The last five years in financial markets have been just that, and then some. Events alone would have been sufficient, but the real excitement has come in describing investors’ all too human responses. The whole human condition was laid out bare and revealed to be richly dysfunctional. The subject of pensions is supposed – indeed, almost guaranteed – to be boring. Suddenly it was exciting.
  • Just how much do we really know? Socrates disarmingly claimed that he knew nothing – except the fact of his own ignorance. He also distinguished between two forms of belief. First but inferior, Socrates identified ‘opinion’: a belief that was correct, but when faced with objections, the believer could not respond rationally. Second and far superior, there is ‘knowledge’ – when one knows not only why the belief is correct, but also why the alternatives are false. Investment is like tomorrow’s weather – everyone has a view, often strongly held. But few of us can substantiate our view with Socrates’ test of knowledge.
  • Philosophers down the ages have decried the lack of clarity in the average person’s attempts at logical deduction. Wittgenstein was notorious for his utter contempt for fuzzy thinking. Remember your Philosophy 101: just because we see only white swans does not prove that all swans are white. Our Cro-Magnon ancestors had lived in Europe for forty thousand years before black swans were ‘discovered’ down under. No number of observations, however high, of white swans could ever prove that all swans are white.
  • Reflecting the English fondness for amateurs, trusteeship is a part-time activity, inevitably taken advantage of by better-organised parties who have their own agenda. It is the trustee’s very English conceit that the well-intentioned amateur can do just as good a job as the investment expert. Back in 2000, most UK pension funds had more invested in Vodafone alone than in the entire US stockmarket. That’s a true story.
  • In order to be successful, a prince must exhibit decisiveness and dissimulation. This uncomfortable and disconcerting insight of Machiavelli is both shrewd counsel to princes as well as a caution to the rest of us. And it is true – because, at least according to Machiavelli, people are basically treacherous. It is nonetheless reassuring to remember that Machiavelli did not actually advocate what he described, and was himself a rather unsuccessful politician. Thankfully only a few of us aspire to be princes. But shareholders and pension fund members are like everyone else – they want princes to look after their interests. And it is altogether fitting and proper that they should do so.
  • I concede that today’s course reading represents a major upgrade on that of as recent as five years ago. We have put away childish things. But we should press on – for many actuaries, reinventing their knowledge base will be pleasurably therapeutic, even cathartic. This is in fact my counsel to the older generation of actuaries who today hold the country’s scheme actuary appointments and who largely set their firm’s technical policies and who influence Whitehall (witness the sorry mess of the minimum funding requirement). Keynes put it so well in the preface to his landmark General Theory back in 1936: ‘The difficulty lies, not in the new ideas, but in escaping from the old ones.’
  • Society is expecting trustees to raise their game. As trustees ascend the learning curve, they could be forgiven for feeling confused – many old ideas are turning out not so much to be wrong, but oversimplifications of complex concepts. In the film Casablanca, Rick, the Humphrey Bogart character, said he had come to Casablanca for the waters. ‘What waters? We’re in the desert’, is the puzzled response. ‘I was misinformed’, Rick retorts.
  • Inevitably, in this Alice in Wonderland world, trustees are confused. ‘Drink me’, read the label on the bottle and Alice did as she was told and promptly shrank to ten inches in height. Whitehall tried this potion in 1997 and thought it had shrunk UK plc’s pension liabilities with its absurd minimum funding requirement formula. It was as illusory as those maps that show Africa to be the same size as Greenland (Africa is in fact fourteen times as big).

These extracts are taken from John Shuttleworth’s valedictory collection at www.pwc.com/uk/eng/ins-sol/publ/pensions/pwc_pensions1998-2004.pdf

An obituary will be published in a forthcoming issue of The Actuary.