On 10 April, the Actuarial Profession organised a roundtable event for members and invited external guests to discuss how quantitative easing is affecting the work of actuaries.
Andrew Smith, a partner at Deloitte, pictured, introduced the session, highlighting how quantitative easing is one of many factors having an impact in the gilt market. He also observed that there has been a historically significant increase in the stock of gilts in issue, despite netting off the gilts that have been bought back as part of the quantitative easing programme.
Kevin Wesbroom, managing principal, Aon Hewitt, then chaired a discussion about the implications of low gilt yields on actuaries and their work. In addition to the well-documented affect on annuity rates and pension funding calculations, participants identified falls in the benefits projected from statutory money purchase illustrations as issues for actuaries to consider.
The attendees were also keen for actuaries to be doing as much as possible to help others understand the issues created by low gilt yields, even though there is considerable uncertainty about how the situation will develop.
This means that actuaries will want to consider a range of possible economic scenarios when advising their clients.
Following the event, Paul Shelley, policy manager at the Institute and Faculty of Actuaries, said: "It is clear that the real issue for actuaries is not quantitative easing per se but how low gilt yields are affecting many aspects of their work. Actuaries will need to call on all of their communications skills if they are to help their clients and the wider public understand the complex issues involved."