UK – The chairman of the National Association of Pension Funds, Robin Ellison, has issued a broadside against actuaries, questioning their fees and their role in setting obligations for firms.
“Should hard-pressed schemes have to pay significant sums to actuaries for complex calculations of sums that in many cases they cannot afford to pay?” Ellison asks in a letter to the Financial Times.
And he asks: “What role should the actuarial profession take in setting statutory or quasi-statutory obligations in the absence of the usual checks and balances, which could load significant extra costs on to employers, costs not envisaged when the pension scheme was set up?”
Ellison, who became NAPF chairman in May, was writing in response to a letter in the FT earlier this week from Ronnie Bowie, senior partner at actuaries Hymans Robertson.
Bowie had said that actuaries’ proposals regarding pension scheme transfer values - while possibly “over-complicated” - were still true and fair. “It is government pensions policy that has to be examined,” Bowie concluded.
Ellison countered, saying: “Is it fair that a member can transfer out with a full ‘risk-free’ sum whole remaining members face the risk of possible underfeeding, or an insolvent employer?”
He added: “The balance between protection of scheme members and encouraging employers to provide pensions is not an easy one to strike, but any suggested solution should bear in mind that the law of unintended consequences is inexorable.”
Elsewhere, consulting firm Hewitt Associates has called for the Pension Protection Fund to make full disclosure of the true cost of providing protection for pensions. It wants greater clarity on how credit would be given for non-funding financial support. It saw share prices and company profits being hit by PPF levies.
Hewitt actuary Raj Mody said: “It's not reasonable for companies to be receiving pieces of the jigsaw from the PPF bit by bit. Companies need to see the whole picture and they need to see it now - they can't afford to wait until November.”