UK - Actuaries have contributed to the huge deficits faced by many pension schemes by failing to take account of improved life expectancy in their advice, trustees have alleged.
Research published by the Financial Reporting Council (FRC) suggests trustees believe actuaries have failed to react quickly enough to the body of evidence pointing to significant improvements in average life expectancy and incorporate this into their mortality assumptions.
The Actuarial Stakeholder Group report noted: "This failure has contributed to the large deficits faced by many pension schemes.
"The trustees interviewed confirmed that there has been some erosion of confidence in the actuarial profession related to past mortality predictions; specifically, actuaries were seen as having been slow to wake up to increased longevity, despite the fact that it was common knowledge that people were living longer."
The research also highlighted the need for actuaries to improve their communication skills, after it emerged an expectation and understanding gap exists between pension trustees and their actuaries, with trustees expecting interpretation and advice, not just figures.
Research was carried out by the Actuarial Stakeholder Interests Working Group, which provides input to the work of the Board for Actuarial Standards (BAS) and the Professional Oversight Board.
The Actuarial Profession said the findings were consistent with its own research carried out in 2005 and 2006.
"The Profession is developing communication material in its core education syllabus and continuous professional development programme, to enable actuaries to acquire the relevant communications skills," the organisation said in a statement.
"It is also developing tools and information to help actuaries to project future mortality improvements."
Nick Dumbreck, president of the Institute of Actuaries, said: "Many of the concepts that actuaries have to communicate to their clients are complex, and actuaries need to put more effort into getting the key messages across to non-technical audiences in a clear and comprehensible way."
The FRC said it would consider how to address mortality through actuarial standards and "other means".
The report is out for consultation until 30 September.