Commissioned project - This research project covered three areas; a survey of current practices, a survey of existing research and debate, and the developing of a common language for communicating current practice on discount rates and risk

Survey of current practice

A survey of the different discount rates that are currently used for different purposes in each practice area in the UK, including: 

  • How these rates might have been constructed/determined/chosen
  • The historical perspective
  • The legislative framework
  • The nature of the promises made
  • The impact of government legislation in changing the nature of some promises over time (e.g. increasing the guarantees and reducing discretion). 

Particular attention was paid to understanding who the liabilities are in respect of, what they need them to show, the extent to which risk is included in the discount rates, and how that has influenced the discount rates used historically including:

  • Shareholders
  • Policyholders
  • Management
  • Regulators
  • Trustees
  • Pension scheme members

The international arena should be considered where it seems to have a particular bearing on the position in the UK but a full survey of international practices is not proposed.

Survey of existing research and debate

A summary of the existing research on the subject of discount rates and a synthesis of the arguments, including a survey of any recent public debate on the subject.

The research will need to consider future developments in discount rates that are already underway (e.g. international accounting standards, Solvency II) including key dates.

Developing a common language for communicating current practice on discount rates and risk

Developing a common language to describe current practices and the rationale behind different discount rates, and improve the communication of discount rates, particularly to users of actuarial services and relevant external stakeholders.

To describe why and how risk is included in discount rates in different circumstances and the rationale behind similarities and differences. 

Related documents

Contact Details

For more information please contact

research@actuaries.org.uk

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Start date
E.g., 23/09/2020
End date
E.g., 23/09/2020

Events calendar

  • Asia Conference Webinar Series

    Webinars
    7 September 2020 - 25 September 2020

    Spaces available

    There will be a prestigious line-up of international speakers discussing the insurance and financial industry’s innovation and change in Asia.  The conference will take place throughout September via an online platform. The webinars consist of plenary speaking sessions and a series of workshop sessions including Life, GI, Data Science, Sustainability, Risk Management and Investment.

    This will be the perfect opportunity for you to discover,ask questions and be at the forefront of current and developing actuarial/financial topics and trends in Asia.

     

  • Spaces available

    This free 90 minute webinar is designed to support the IFoA CPD Co-ordinators, and others, involved in supporting our members to achieve their CPD requirements. 

    The programme will include an overview of the new CPD Scheme; specifically sharing with you key messages to support you implement and embrace the new CPD Scheme for our members within your organisation and regional community; how to arrange a reflective practice discussion; and an interactive reflective practice discussion learning exercise.  In addition, delegates will gain information about accessing, and making the most of the IFoA event Toolkits which you can make use of to run your own in-house events and events for regional communities. 

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    16.00-17.00 GMT+8

    Consumer expectations are changing Insurance. The Royal Commission in Australia, Design Obligations in the UK, the insurtech ecosystem, and digital-first consumers demanding personalised solutions will all revolutionise how insurance looks like in the future.

  • Spaces available

    12.00-13.00 GMT+8

    This presenter / panel workshop hybrid will be anchored by two presentations examining the socioeconomic, medical and technological factors that will have a significant impact on mortality and our pricing over the next 20 years and beyond. It will also discuss whether significant mortality improvement will continue in Asia or whether varying experience of low improvements or deterioration. 

  • Spaces available

    12.00-13.00 GMT+8

    This presentation aims to provides an overview of the reformation of current Chinese regulatory solvency regime, how industry coping with the new normal after pandemic time and how the reformation of the regulation could help the insurance industry gets back on its feet as well as coming back to the “protection” core value for the policyholders. The presentation would include:

  • Spaces available

    16.00-17.00 (GMT+8) | 09.00-10.00 (BST)

    The basic data of China’s 2nd Critical Illness Mortality Table covers 2000+ products in Chinese market, including about 340 million insurance policies and 5.1 million claimants. Presenter will give the audience a general understanding including but not limited to the following contents:

  • Autumn Lecture 2020: Professor Elroy Dimson

    Online webinar
    14 October 2020

    Spaces available

    Many individuals and institutions have a long-term focus, and invest funds for the benefit of future generations. Their strategy should reflect their long horizon. University endowments are one of the oldest classes of institutional investor, and I will present the first study of the management of these endowments over the very long term.

  • GIRO Conference 2020 Webinar Series

    Available to watch globally in November.
    02-13 November 2020
    Spaces available

    This year's GIRO has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the general insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's GI Online Learning Resource area.

  • Spaces available

    Cash-flow driven investing is a game-changer for DB pension funds navigating their end-game. Suitable for sponsors who want to reduce risks on their balance sheets. And for trustees, it shifts the focus to providing greater certainty of returns, managing funding level volatility and ensuring they have enough income to pay cash-flow requirements.

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    The talk will provide an understanding of the priorities and relationships between deficit reduction contributions, in the context of wider scheme funding, and different types of value outflow from the employer based on the working party’s recently published report.