5 new Pensions Working Parties

The Pensions Practice Executive Committee and sub-committees are currently overseeing the formation of  5 new member-led research working parties:-

1.   "Bond Yields – Why are they so low and will they increase?" Working Party 

Research to determine what information can be inferred from interest rates at the present time and the market conditions that necessitate changes in interest rates. It will assess whether it is reasonable to assume that interest rates could revert to previous levels and the conditions that might be required for this to happen. Other areas to discuss could include changes in the market for corporate bonds; investment patterns of pension schemes and other regulated financial entities that could affect the market pricing.

2.  "General" Working Party 

The environment in which members give advice to clients, or their employers, on how occupational pension provision can be made is becoming increasingly complex.  It would be useful for members to have access to clear information in the following areas:

• mortality and future projections in life expectancy;
• the regulatory framework for financing pension schemes in the UK;
• hedging and other re-risking products; and
• mechanisms for mitigating or sharing risk.

In addition, there are some more speculative projects we are interested in that include:

• investigating aspects of the proposals to revise the IORP directive, including the holistic balance sheet; and 
• the right split between private and state pension provision.

A range of projects could be developed for each of these areas, and the output could vary depending on whether a narrow or a more detailed focus was taken or an approach to provide a wider overview of the relevant issues. It is expected that there is value in either method and the IFoA would be happy to support any volunteers wanting to investigate these topics, or aspects of these.

3.   "Defined Ambition" Working Party

Research to look at defining what “defined ambition” is, or could be, including the risk profile such a scheme might pose for members and sponsoring employers. It should also consider whether it is really a new concept and whether there are any regulatory obstacles to achieving a “defined ambition” design currently.

4.   "Inflation" Working Party

This would involve research to study the information that is available to trustees and their scheme actuaries in order to help them consider what would be an appropriate approach to setting CPI assumptions.

5.   "State Pension Age" Working Party

This working party would address the purpose of the state pension age and the information that needs to be taken into account when determining at what age this should be set.  It would consider whether there is an optimum division between time spent at work and in retirement, for example to facilitate supportable levels of saving and risk. The paper should also look at the wider economic effects that need to be taken into account in determining state pension age.

Time Commitment:   For each of these working parties, volunteers will be asked to attend between 8 – 12 meetings per annum and follow up on actions between meetings.  Meetings are normally held in London, at Staple Inn Hall, however there is no requirement for this to be the case and if it would be sensible for the meetings to be held in another location, this can be discussed and agreed.  Meetings usually last for 2 hours.  Please note that there is flexibility regarding your attendance at meetings and members can attend by conference call as necessary.  

How to get involved:  If you would like to offer your support and consider volunteering for one or more of these working parties, please contact Debbie Atkins, Head of Volunteer Engagement.  When contacting Debbie, please indicate which of these working parties you are interested in being part of and please provide brief details of your relevant experience and your reason for wishing to become involved.  A note of your ARN would also be helpful.

All members who offer their support will be invited to attend an initial scoping workshop / meeting to be held in mid September at Staple Inn Hall, London, and attendance can either be in person or by conference call. At this initial meeting, which will be chaired by the sponsor for the research topic and a member of the Pensions Practice Executive Committee / sub-committee, interested members will discuss the intended scope of the project, confirm that they still wish to be involved, and discuss whether a Chair is needed, in addition to members, in order to drive each of the working parties forward.  Some of the outputs of these working parties are likely to be a workshop at the Pensions’ conference; articles in the British Actuarial Journal, the Pensions’ newsletter; and/or a paper presented at a sessional event.