Interesting article in the Scotsman by Erikka Askeland today that has quoted me a number of times. Readers of our blog will be familiar with some of the concerns expressed.
You can read the article on the following link
The PPF is a great organisation and its introduction was a major achievement of the current government. But for a minority of SMEs the levy will sink them if they dont find a more realistic way of spreading the load.
Attended a very convivial cocktail party organised by the nice folks at McGrigors Pension Trustees Limited in Glasgow.
The only (semi) professional content of the evening was a fiendishly difficult pensions quiz. The sharpest legal and actuarial brains in Scotland set to work but who should win the bottle of Champagne (well actually a very modestly priced sparkling Italian wine more in keeping with these straitened times) other than our very own business development director David Davison who got 11 questions right out of 15!
The Actuarial Profession has published detailed results in relation to the defeated merger proposals but crucially omit to show the breakdown in the vote between Scotland and the rest of the UK. In particular we still don’t know whether the required two-thirds majority of Faculty members who voted for the proposals depended on the support of members based outside Scotland.
Otherwise the figures show fairly similar levels of support from UK actuaries and actuaries based elsewhere.
I explained in an earlier post why I, as a Fellow of the Faculty of Actuaries in Scotland, did not support the proposals put forward by the leadership of the Actuarial Profession for a merger with the Institute of Actuaries.
I was among many actuaries who were surprised to learn that the Faculty of Actuaries voted, by a small margin over the two-thirds majority required, to support the merger whereas the Institute of Actuaries did not vote for the proposals, falling short by a small margin below the three-quarters majority required under its constitution (the differences in voting majority required being historic parts of the respective constitutions of the two organisations).
The vote raises some important questions:
- Was it appropriate for the Actuarial Profession’s leadership to take forward proposals to the stage of a vote when they clearly had not achieved consensus in relation to their proposals?
- Why did the membership of the Institute of Actuaries not support the merger? One of the most vociferous opponents of the merger proposals Patrick Lee draws attention in his blog 21st century actuary’s blog to a poll he has set up within the Actuarial Profession’s discussion board (open to members of the Institute and Faculty). It remains to be seen whether useful information will be derived from this poll and in the meantime we can only speculate.
Possible reasons for individual members of the Institute voting against the Profession’s proposals are:
- The terms being seen as too generous to the proposed Scottish constituency with no specific provision for other constituencies
- They did not think the merger process as managed by the Actuarial Profession’s leadership was an appropriate way of determining whether or not there should be a national professional body for actuaries based in Scotland (The Actuarial Profession should release detailed figures as to how the proportions of members supporting the vote varied between actuaries based in Scotland and those based outside Scotland – it should, of course, be a matter for actuaries based in Scotland as to whether they have their own national professional actuarial body.)
- Dislike of the proposed name – The Chartered Actuarial Profession and/or the designatory initials FCAP that would have gone with it
- Feeling that there was inadequate consultation on the detail of the proposed new charter
- Feeling that the Profession’s leadership had not proved their case for merger
The Actuarial Profession’s leadership clearly has some thinking to do but the comments made by the President of the Insitute of Actuaries Nigel Masters are encouraging in some ways.
“We didn’t quite make the high threshold but it’s clear that the majority of our members did support change. We have to consider why our proposals didn’t command enough support and so the Institute Council will consult with members and look at which elements of the proposal need further improvement.”
The problem is that there is an outside world out there that probably doesnt much care about whether the Institute and Faculty merger. There are many more pressing issues for the Actuarial Profession to address.
All being well I will be on holiday when the vote is taken on 23 July to potentially vote out of existence the Faculty of Actuaries in Scotland after 150 years.So I have now cast my vote by proxy and instructed the Chairman to use my vote AGAINST the merger proposals.
The merger debate has been spirited and interesting but at times rather focussing on personalities and minutiae. It would be easy for someone viewing the Actuarial Profession’s online forum to see some of the debate on the detail as slightly obsessive. I started out with a gut feeling that merger was the wrong thing at this time but on reflection and having considered both sides of the argument my reasons for voting against have crystallised into quite a small number of points:
- I believe that it is in the interests of actuaries in Scotland and the future of the financial services industry in Scotland to have its own national actuarial professional body. I may personally live outside Scotland but almost half of Spence & Partners’ clients are based in Scotland and almost half of the firm’s staff so I believe that I have a legitimate interest in the outcome.
- No provision has been made in the merger proposals for Northern Ireland. There is a population of 1.75 million with a public interest there to protect and enshrining a specified number of seats (ultimately 6) on the Council of the new actuarial body for actuaries in the Scottish constituency (Scotland’s population is 5.2 million) and none for actuaries representing Northern Ireland is just unacceptable.
- The future direction of the regulation of actuaries in Scotland should be decided by actuaries based in Scotland not those based elsewhere. Other actuaries have their own national bodies and should not use their vote to end the existence of the national professional body for actuaries in Scotland.
- Merger whilst not irrevocable, in the sense that a new professional body for Scotland could be established in future, could not be easily undone.
(These views are personal rather than necessarily reflecting the view of Spence & Partners or that of other actuaries within the firm.)
Whilst totally respecting the status of Fellows of the Faculty of Actuaries who are not based in Scotland there does seem something quite wrong with the idea that the continued existence of a professional body based in Scotland could be voted out of existence partly by Fellows based elsewhere (South Africa, England, Ireland etc.)
If Scotland gains more independence the logical consequence of a merger vote is surely that if not now then at some future date an independent local actuarial professional body will develop as in Ireland, for example, and in many other independent or even semi-independent states.
If the proposals for merger are passed by the required majority of Faculty members it seems to me that actuaries based in Scotland should consider whether they (as opposed to the Faculty membership drawn which is drawn from a number of countries) wish to have their own independent professional body (similar to the Society of Actuaries in Ireland perhaps) and seek to ensure that membership of this body would be afforded the similar status under UK legislation to the Chartered Actuarial Profession. Perhaps there will be insufficient interest at this point in time among Scottish actuaries to establish a new national professional body but on the other hand why not? It seems to have worked in Ireland.
At the same time as they moved from their long established headquarters at Pacific House, leading Glasgow law firm McGrigors have changed the name of their pension scheme trustee company from Scotia Pacific Trustees Limited to McGrigors Pension Trustees Limited. The company says it is doing so “to reflect more clearly the nature of the company’s activities, and the link to McGrigors LLP.”
They say that they “believe that experienced pension lawyers are ideally placed to act as pension scheme trustees.” Hmm not sure this follows 100% of the time but we have substantial experience of working with the team at Scotia, sorry McGrigors and they are good pension scheme trustees and we have been happy to introduce them to our clients.
Good luck to the McGrigors Pension Trustees team with the name change!
We have provided actuarial advice to many employers in recent years on liability reshaping. This is often financially motivated because by swapping a high rate of guaranteed pension increases for a higher pension now cash flows are brought forward which are easier and cheaper to fund than distant cash flows. This can substantially reduce the cost of buying out pensions as employers reach the Pensions Endgame. These exercises tend to have a high take-up rate because pensioners in their 60s and 70s have a preference for a higher income now “while they can enjoy it.” Read more »
Spent much of yesterday in connection with caseworkers from the Pension Protection Fund who are taking over the role of coordinating entry to the Financial Assistance Scheme.
There is much that is wrong with pensions and retirement provision but the PPF and FAS are fantastic developments. Some members of schemes we administer would have received no benefit at all before their inception.
The protection schemes are not perfect but they must be hailed as a significant achievement of the current government though it is unfashionable to give them credit for anything these days.
Preparing a pension scheme for the PPF or FAS is a major project and if you have a scheme that needs sorted out here is a link to our Pensions Protection Fund and Financial Assistance Scheme services.