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The Actuary The magazine of the Institute & Faculty of Actuaries

Shape up your salary in 2005

Both clients and candidates are always very keen to find out about actuarial salary expectations, either for themselves or for their market, to ensure staff retention.
Every year actuarial recruiters aim to put a salary survey in place: the reasons behind their reluctance to do so is the long list of factors to consider when valuing an actuary’s worth.
You will find detailed opposite a rough outline of where 2004’s salaries sit across four practice areas. Read them with interest but, before insisting on a salary review with your boss (or looking for a new job!), it may be wise to assess the factors contributing to your salary.

Progression through the exams
With December’s exam results a distant memory of jubilation or consolation, the profession and its students now look forward to the introduction of the new exam scheme (see article on p42). This scheme will allow students to maintain a more general focus until the more specialist papers, where there will now be more of a choice.
This should assist students when trying to assess their market value. For those individuals with two years’ experience who have struggled to get to grips with the whole work/life/study balance, the key is to gain some specialist experience. See the next column for the hot topics of 2004, which will no doubt progress and develop further into 2005.
At the other end of the spectrum are candidates who have studied for years, gained excellent exposure in their chosen discipline, but for whom the final specialist paper now represents the Mount Everest between student life and fellowship.
Both types of individuals are valuable to a company: the more junior can provide the support to the actuarial team, gaining exposure to the actuarial methodologies which once mastered will assist in successful examination passes. The ‘almost-qualified-but-awaiting-that-pesky-pensions-paper’ actuary will have some exceptional levels of knowledge and be able to encourage and assist the more junior team members while still learning and working towards qualification. However, it is harder to apply the basic salary matrix to these types of candidates.
The more typical candidate is one who is progressing at a steady pace through the exams, gaining exposure to new types of experience at regular intervals, and working his or her way up the team. These are the types of candidates that our banding applies to.

Specialist experience
There have been many market trends in 2004: job specifications have been littered with requirements for new skill-sets, and this applies across all fields. With new legislation and opportunities in the actuarial market, candidates who have had the opportunity to develop these new skills and can thus include the ‘buzzwords’ on their CVs really can justify a salary increase: some clients are prepared to pay the premiums for specialist experience.
The list below highlights some of the key growth areas which have affected recruitment, candidate selection, and salary offers throughout 2004.
‘Buzz’ areas 2004
The Pensions Act 2004
ALM modelling assets and liabilities of pension funds
Multi-disciplinary benefits schemes
Life insurance
Realistic balance sheets
Derivatives marketing to insurance companies through
investment banking distribution channels
Risk-based capital work
IAS (international accounting standards)
General insurance
Dynamic financial analysis
Reinsurance pricing
In-house actuaries at managing agents
Capital modelling

Other recruitment trends have included more movement between disciplines. There are a few reasons for this, one being that employers can be more flexible when it comes to evident academic ability. I am sure many of you readers believe that your skills are transferable thankfully employers are learning to re-educate themselves: much better to employ an uber-keen pensions actuary in a general insurance role than a jaded GI student who is fed up with her or his current employer! Not that this is the norm, of course!
Another reason is that after several years of study and focus in one particular area, actuaries are looking for a new challenge, and as they say, often a change is better than a rest! These moves away from traditional actuarial work include roles in investment, banking, or retail.
It is worth pointing out that many of these cross-discipline swaps come at a price. Those candidates who have little or no knowledge of the new area, but a huge appetite for change, ambition, and success, may well have to agree to a reduction in salary and benefits, putting the usual salary increase which comes with a move on hold until that time when they have proved their worth and ability.

Salaries in the north tend to be less than in the south of the UK, and this applies throughout the varying levels of qualification. For example, a new graduate starting in Manchester is likely to start on around £20,000 a year. However, in London or the Home Counties he/she is likely to be on £24,000 a year.
However, when it comes to moving companies and heaven forbid crossing that north/south divide, it would appear that everyone is a winner: those candidates moving south are able to reap the rewards of higher salaries, not quite believing that a £20,000 increase was possible (note: qualified GI actuary). Conversely, those candidates moving from London to the north are often able to maintain their higher salary, while also benefiting from a better work/life balance or surroundings.
It is also worth considering the opportunities to move abroad. With this decision come all kinds of contributing factors: not only upheaval, relocation, family, visas, but also change of climate, lower costs of living, tax implications, and lifestyle. It is because of this trend in recent years that Darwin Rhodes has opened offices around the globe (Australia, Hong Kong, Shanghai), and is able to include realistic salary levels in this survey.
More often than not it is qualified actuaries who are more successful with these moves, purely owing to the visa issues that arise when anyone tries to relocate. Darwin Rhodes has had more interest from clients in securing actuarial students from the UK, and is managing to educate clients about the possibilities of sponsoring or seconding students, but I wouldn’t all rush out and buy yourselves a cork hat and boomerang just yet!
As a brief overview, strong candidates for a move to Asia seem to be qualified life actuaries and also those candidates who have reached a certain level and are looking to take a more general management route (CEO, CFO, country manager). The general insurance market is still significantly underdeveloped, but with many of the larger insurers making inroads to India and the surrounding areas, it is only a matter of time before this market explodes.

2004 overview
2004 was a good year for actuarial recruitment. The market seemed to open up a little, creating opportunities in previously uncharted waters. The majority of the Lloyd’s managing agents have now recruited an in-house actuary, consultancies are offering a more diverse range of work, the investment banks have recruited a significant number of actuaries, and the cross-discipline market has increased.
Employers now acknowledge that although basic salary remains a priority, other benefits such as bonus levels, pensions funds, and the ‘softer’ benefits such as gym membership and flexible working are now considered almost as important.
2005 is already shaping up to be another great year, so here’s to that, clients, candidates, and recruiters alike!