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The Actuary The magazine of the Institute & Faculty of Actuaries

The Social Policy Board

The Social Policy Board has its origins in the Vision and Values exercise of the late 1990s, which stressed the need for actuaries to play a more proactive role in matters of public interest. As a result of this exercise, the former Wider Fields Board was split into the Finance & Investment Board and the Social Policy Board, the latter’s aim being to advance public interest in areas where actuarial expertise is relevant and to support actuaries working outside the four major practice areas, in particular in health and long-term care.
In his interim review, Sir Derek Morris set out three levels of public interest activity for the profession:
– the individual level where an individual actuary must observe the highest standards of public conduct;
– the intermediate level where the profession sets standards which its members must follow; and
– the collective level where the profession as a whole addresses issues of public interest and seeks to influence those with power to protect and enhance the public good.
In keeping with the founding charters of the Faculty and Institute, it is in this last area that the Social Policy Board seeks to provide leadership.

The Social Policy Board sponsors the annual health and care conferences and provides assistance with healthcare examinations. It is also responsible for the Ageing Population Group, The Actuaries’ Panel on Medical Advances, and the Damages Working Party. The potential for work in these areas is large and in this sense healthcare remains a ‘wider field’. In the US and some European countries, as many actuaries are employed in healthcare as in life insurance and pensions. In the UK actuarial involvement is lower, but these groups work closely with the NHS on a range of topics from the purely demographic, through the consequences of negligence, to the financial implications of increasing longevity.

Financial services
One important area of social policy lies in assisting consumers of financial services to have a greater understanding of the products available. A high-profile example of this was the publication in November 1999 of the profession’s report on endowment mortgages, which helped to inform the public debate about their merits and drawbacks.
In 2001 the board sponsored a committee of business and opinion leaders, chaired by Sir John Banham, which advised on the provision of financial information and advice. The committee recommended wider provision of financial advice, particularly in the workplace. The board acted on the recommendations of this committee by, for example, emphasising to government, regulators, and consumer groups that fewer than 20% of families are making adequate provision for retirement. Also, Alan Goodman, chairman of the Financial Consumer Support Committee, produced a report in November 2004 which he presented to Treasury officials. There have also been a number of sessional meetings tackling the problems of saving throughout life, including Deborah Cooper’s Family Fortunes, A Guide to Saving for Retirement in 2002, and Is there a Retirement Savings Crisis? in May 2005.
As people grow older they need additional finance to augment pensions and to pay for home repairs and long-term care. The profession provided two reports on equity release in 2001 and January 2005. The latter provided new information on market potential, better safeguards for consumers, and new approaches to pricing equity release products. These groups drew on other talent besides actuaries, helping to remove the alleged barriers between the actuarial profession and other professions.

Who needs babies?
Showing that actuaries can talk about problems other than those besetting the elderly, the board published More Babies? Who needs them?, which used the latest Government Actuary’s Department population projections to show the impact of different birth rates on the size, shape, and age structure of the population by 2050. It demonstrated how sensitive the age structure is to relatively small changes in the birth rate. The board sent copies to MPs, members of the House of Lords, government officials, think-tanks, voluntary bodies, and journalists, and received responses from many of them.

Other topics
There are always more topics than can be tackled by the board’s volunteers. One is advice to those approaching pensionable age, particularly about the complications of the state pension scheme and its relationship with other forms of pension provision. The actuarial profession is in a strong position to give advice and the board will be launching a post-retirement risks webpage in the next month.
Another topic the board is currently engaged in, building on a successful seminar for actuaries and lawyers earlier this year (see The Actuary June 2005, ‘What’s the damage?’), is encouraging the government to introduce structured court settlements for personal injuries.
Finally, the board is reviewing the effect of climate change on the work of actuaries both in addressing the costing of risk factors involved and their likely effect on investment institutions.
The Social Policy Board would appreciate feedback from readers on whether its work is effective and whether there are other topics that could be addressed.