Pensions Conference 2012: Review of Workshop D2 - Identifying and tackling ethical dilemmas in pensions

Identifying and dealing with difficult ethical situations is at the heart of what it is to be a professional.

Pensions actuaries are likely to encounter a variety of such situations during their careers.  In the first part of this session, the presenter described how a greater awareness of ethical issues can contribute towards better professional decisions.  Many situations have an ethical dimension, and actuaries may need to justify how they addressed these considerations to third parties.

What tools are available to pensions actuaries to guide them and what skills are needed to use them?  The presenter described the inter-play between case studies, rules of conduct and ethical values.

Case studies can help us draw on past experience, including experience of others, to examine our ethical behaviours.  We then need to be able to apply the lessons learned in other, perhaps very different, situations.  Rules of conduct, such as regulations and guidance notes, are usually less subjective but also less flexible.  Ethical values, such as those contained in the Actuaries’ Code, are broader and hence more flexible, but need greater interpretation in particular circumstances.

In practice, the actuary needs to draw on all of these tools in dealing with ethical problems.  The second part of the workshop focussed on two case studies, and the audience was asked to consider which aspects of the Actuaries’ Code might be relevant.

Case study 1 placed the actuary as adviser to a company proposing a pension increase exchange (PIE) exercise.  The company was planning an aggressive member communication exercise in order to maximise the take-up rate.  It had rejected the actuary’s offer to review the communications to ensure their transparency and fairness.

Case study 2 considered an actuarial valuation for a pension scheme of an employer which was the subject of a proposed sale.  The results of the valuation were to be made available to the prospective buyer.  The parent company of the employer (ie the vendor) had offered the actuary’s firm an additional fee of 25% if it “put the right people” on to the actuarial valuation.

The case studies provoked a lively debate.  A range of views were expressed as to how the actuary should act, despite broad agreement on the aspects of the Actuaries’ Code that were relevant.

In summary, it was concluded that the Actuaries’ Code could be a useful support in making difficult ethical decisions, but these issues are still likely to be complex and require professional experience and judgement.