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The Actuary The magazine of the Institute & Faculty of Actuaries

Letter to members: Finances of the profession

Last week we announced to practising certificate holders an increase in the fees for certificates, from £375 pa to £750 pa, to take effect for renewals on or after 1 June 2005. We are writing to all members to explain the background to this decision.

The Finance and General Purposes Board and the Faculty and Institute Management Committee (FIMC) have carried out a thorough review of the finances of the actuarial profession. This review inevitably reflected considerable uncertainty regarding the future role of the profession, after the Morris Review. Nevertheless, our financial review indicated significant financial pressures on the profession, requiring stringent economies in our current activities, coupled with a need to increase our income.

The current review of our profession by Sir Derek Morris and his team is tangible evidence of the pressure on our resources arising out of public expectations of the role of professional bodies (the legal and medical professions are facing similar issues currently). We already spend approximately £2m pa (over 40% of subscription income) on a combination of standard-setting, discipline, compliance monitoring, and other activities mainly in relation to statutory actuarial roles. Our current, annual income from practising certificate fees is approximately £440,000.

We can be certain that the Morris Review will recommend strengthened processes of regulation for our profession, with inevitable cost implications. In our response we have dwelt on the potential burden on individual members of our small profession, and we can, with good reason, hope that the review will suggest approaches to sharing additional regulatory costs with external stakeholders. Nevertheless the cost of sustaining professional status is more likely to increase than to decrease for individual actuaries.

In addition to this pressure to do more, there are also increases in the cost of existing activities. Like many of those whom we advise, we face the burden of a very substantial increase in pension costs, and we have also seen increases in accommodation costs. Our IT infrastructure has required sustained investment.

The Finance and General Purposes Board and FIMC, together with the staff, have reviewed the position thoroughly and have taken the following actions:

  • various expenditure economies including reduction in mail distribution (all members are encouraged to make use of web-based services as much as possible);
  • a decision to seek a material increase in practising certificate fees as set out above;
  • a probable real increase in subscriptions when these fall to be considered by Institute and Faculty Councils (and Faculty members) later in the year;
  • sponsorship is actively being sought to help contribute to the cost of events.

Although we will continue to seek economies and to develop a fair approach to sharing with others the cost of regulation of actuaries, it is likely that further real increases in various fees and in subscription levels will be required in future years.

With FIMC’s support, we will shortly be conducting a survey of all members to seek their views on the value of the services provided by the profession which they pay for in their subscription. The information we gather will play an important part in our future planning.