Professor Stephen Hawking, one of the greatest thinkers of our time, sadly passed away in March. His research on gravitational singularity changed the orbit of theoretical physics and cosmology. And his non-conformist personality earned him a place in our hearts.
Recently, I returned to my alma mater, Columbia University, for the graduation anniversary. We celebrated the occasion with a discussion between two prominent residents: professors Joseph Stiglitz, 2001 Nobel Laureate; and Bruce Greenwald, a legend in value investing. Under the broad subject of globalisation, the social scientists debated about the past and the future. Regarding the past, the discussion focused on the (lack of) opportunities to revive the manufacturing sector in developed economies. On the future, the crucial role of new technologies and automation in all industries increases the need for continuing education and research, and the innovation that these bring. The debate was very engaging, and albeit macroeconomic in nature, it was of actuarial relevance.
The origins and expansion of defined benefit (DB) pensions are directly linked to the growth of manufacturing in the inter-war and post-Second World War periods. Inevitably, as the manufacturing workforce later shrank and services-orientated corporations expanded, the DB sector reached its zenith. Hence, arguably, long-term sustainability of DB pensions requires research and innovation.
In this issue, The Actuary addresses innovation in DB: John Herbert discusses the merits of scheme consolidation, as a potential source of cost efficiency in such mature business; and Costas Yiasoumi and John McAleer present a framework to manage run-off schemes.
Another sector of actuarial importance enhancing its management techniques is insurance. In this month's interview, Mark Azzopardi discusses the evolving role of insurance investment solutions, technology and opportunities for actuaries in this field. And Richard Schneider discusses an original framework for asset liability management. Continuing with innovation, in the context of lifelong learning, Jeremy Affolter's story of retraining illustrates how actuaries can expand their knowledge beyond the traditional boundaries.
Enjoy the read!
Francisco Sebastian
Editor