[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

Are you always professional?

Last month’s article included a case study in which you were approached to act as scheme actuary to a small defined benefits scheme, which had been in opera-
tion for some time, covering employees of a quoted company which has been experiencing trading difficulties of late.
The letter from the trustees asked you to step into the breach with a report due very shortly. The last incumbent of the post was an actuarial one-man band who resigned the post without notice. You are assured that most of the preparatory work and calculations have been done and will be made available to you.
You are part of a recently formed team of pensions consultants, eager to expand its client book. Your instant reaction was to contact the previous actuary to the scheme; but a telephone call and email both confirm that he is away abroad until well into the new year, far too late to defer acceptance of the actuarial assignment.

What do you do?
You have done well so far, but you will find it helpful to refer to the Professional Conduct Standards (PCS). One preliminary detail to establish is that you do have a scheme actuary certificate, don’t you? And are you personally competent to do the work requested (see section 3.2 of the PCS)?
Trying to contact the previous incumbent is vital (see section 7.2 of the PCS). Quite often a one-man-band will have an arrangement with other small operators who can handle queries on his or her behalf, with the knowledge and blessing of the client company. From the detail in the question, this does not appear to be the case here.
You need to apprise yourself of as many of the facts surrounding the work before you are in a position to accept it. The answers to the questions below will help you to decide the next steps:
– Why has the previous actuary ‘resigned the post without notice’?
– And in the middle of preparing a report? This in itself arouses suspicion. There may be issues under PCS 7.5 arising from both of these points.
– Have the trustees given you a complete picture? At one extreme, there are possibilities of unprofessional behaviour. At the other, it could be that the resignation was forced by pressures to produce numbers not in accordance with the facts; the financial situation the company suggests this is possible. Section 3.4 of the PCS may help here.
– What sort of report is due shortly? If it is a statutory report required by the Pensions Regulator, a formal approach might be made by the trustees to have the date of submission deferred, with due explanation of the circumstances. You can then confer with the outgoing actuary before making any formal decision. If it is a periodic report for the trustees and/or employer, a delay in its completion is highly recommended. Section 2.3 of the PCS warns us about accepting work with onerous time constraints.
A number of other issues present themselves:
– It is unlikely that ‘the preparatory work and calculations’ can be used as anything other than a benchmark check. It is your name on the bottom of any report and you have to be professionally satisfied with its content (see section 3.4 of the PCS).
– You cannot act without being aware of as many of the facts as possible. There may be good reason to decline this assignment, or a least defer it until the truth of the matter can be fully appraised.
– There is no obligation on you to contact the previous actuary where this is physically impossible. But every effort must be made. All pertinent facts must then be weighed in the decision to proceed. (See sections 7.2 and 7.3 of the PCS.)
– Your senior partner should be approached for guidance before a decision is taken (see sections 1.4 and 1.5 of the PCS). In all probability, your firm is being recruited to perform the analysis (not you) and he or she will be keen to be involved in the decision.
– If you decide to defer a decision, you should explain the professional issue to the trustees. Section 2.3 of the PCS is a guide here again. You should not claim that ‘no actuary could accept this assignment’ (see section 8.1 of the PCS).
– If you agree to proceed, you should ask for previous copies of this report, as part of the data for analysis, and indeed all other relevant communications prepared by the former scheme actuary (see section 3.4 of the PCS).
– If the facts indicate possible impropriety on behalf of the previous scheme actuary, the detail should be discussed first with your senior partner, and then with the actuary himself (see sections 2.5 and 4.5 of the PCS). If explanation for actions cannot be satisfactorily obtained, then it will probably be appropriate to contact the Professional Guidance Committee for further guidance (see section 1.5 of the PCS and the definition of professional body).