To quote from an extract in The Week referring to an article by Alistair Osborne in The Times, which focused on collective defined contribution (DC) schemes: "Worst of all, income is 'determined by actuaries', those masterminds responsible for the Equitable Life and 'with-profits funds' fiascos."
Such sarcastic rhetoric is becoming frequent but is also apparently unanswered. It makes me wonder if the reputation of all actuaries has been undermined by the Equitable Life actuaries. But of course we cannot ignore the debacles of Statement of Standard Accounting Practice (SSAP) 24, Inland Revenue taxation of surpluses and the withdrawal of dividend tax relief - all implemented by others but unanswered by pensions actuaries at the time. The short termism of these initiatives, pandering to analysts and politicians who are only interested in the next quarter's results or the next election, should have been snuffed out by a logically and well-communicated response before they were implemented. The profession should have at least been clearly seen to be opposed.
I worry about the legacy, but also the future, of my profession. Our failure to communicate clearly the folly of those who don't understand all of the economic and demographic dynamics and implications of their ill-thought-out ideas not only leads to potential financial ruin for many beneficiaries of pension arrangements but also the ridicule and demise of my profession.
The starting point to reversing this is an overtly explained, clearly communicated impartial objection by the actuarial profession to the proposal to not require retirees to annuitise DC balances (or at least create some kind of disciplined lifetime drawdown facility). It is time we stood up and communicated in layman's terms why this is a financially catastrophic idea for the long-term financial security of our elderly - before it happens. We have a duty to our profession. If we don't act soon, I predict that in 10 or 20 years' time we will be among those blamed for the plight of the destitute that have no private pension, and for the sharp increase in social security welfare costs.
Danny Quant 23 June 2014
The editor welcomes readers' letters but reserves the right to edit them for publication. Please email [email protected]. The deadline for receiving letters for the September issue is 18 August 2014.