Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • June 2015
06

Intergenerational fairness

Open-access content 1st June 2015
2
US Protest - iStock

Icki Iqbal points out that he was not the source of the confusion between standard of living and retired standard of living. The criticism in my earlier letter cannot, therefore, be directed at him, and I withdraw it unreservedly as to him.

I am still troubled by the approach set out in his original letter (The Actuary, November 2014 Learners, earners and burners) and by his recent statement that "[it is] so self-evident as to be axiomatic that each generation has to pay its own way. If it doesn't, it will bequeath a terrible burden on its successors." As to private plans this is clearly so, but in the case of public plans it is not.

In a public plan each generation does not have to "pay its own way": it can pass the parcel to the next generations. Indeed, if it does not do so, it is unreasonably burdening the current generation and benefiting those coming later. 

Pre-funding a public plan such as US Social Security, as is often suggested by the extreme right wing, would be a prime example.

Funding at a level lower than is needed to support benefits over the long term can obviously lead to a Detroit-style disaster. Right now in Detroit, it has led to an uninformed decision to switch to a defined contribution plan, triggering an unnecessary termination of the defined benefit plan. 

This termination will have all the effects that would arise in an insolvent private plan; in a public plan this need not be, though probably some cutback of benefits cannot be avoided in this instance.


Brian A Jones 9 April

This article appeared in our June 2015 issue of The Actuary.
Click here to view this issue
Filed in:
06
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

GI Model development contractor

£700 - £1000 per day
Reference
119012

Pricing Actuary - Marine, Credit, Aviation

London (Central)
Total package circa £230K
Reference
119011

Capital Modelling Actuary

London, England
£70000 - £100000 per annum
Reference
119010
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200