Are We Doing Ourselves A Disservice?

[Andy the Actuary]

The actuarial profession is disappointing. It is very clear that certain (unnamed members) of the profession assisted Congress in coming up with this convoluted "Hobson's Choice" methodolgy for effectively eliminating credit balances. These same individuals proudly display their expertise at the EA meeting by providing the "key to the Rosetta Stone" for us plebians. The standard operating procedure appears to be create a mess so that you can clean it up and be a hero.

The bottom-line is that PPA2006 is protecting pension actuaries in the short-term by requiring us to charge more for a work product that is no better and providing more communications that are only of value to plaintiffs' attornies. In the long-run, the world will not require 2,000 pension actuaries and the EA meeting will be able to be held at Starbucks.

[Guest Grant]

Well said Andy!

While I am not privy to the whole process, it seems to me these so-called leaders should be a bit more active in helping to craft legislation. We go to the EA meeting and are told "I dunno" on the simplest of questions. I am sure the PPA was not drafted in a vacuum. I can't see some Congressman debating the merits of Carry-Over versus Pre-Funding Balances. So somebody came up with that stuff, and that somebody should have been clever enough to provide some inkling on what is meant by, say, asset averaging, or what a "market rate" might mean, or the myriad unanswered basic questions.

And I would love to get ahold of whoever thought it was a good idea to have April 1 as the cutoff to do a valuation to prove you are not underfunded.

What shall we do after the Starbucks meetings are too lightly attended>

[rcline46]

And although not directly involved in DB plans, who is going to tell the partners and sole-props that their deferrals must be in the plan by Jan 31 (on calendar year plans)?

[Effen]

display their expertise at the EA meeting by providing the "key to the Rosetta Stone

Andy, I've been thinking about what you said and agree with some of it in principle. I believe actuaries had very little to do with the new law. The ASPPPA people were busy protecting as much of their 401(k)/small db plan turf as they could and the Academy people did their best and got a few changes made. Since we don't have a National Retirement Policy, Congress perceives a problem and they fix it. I agree PPA isn't the best, but you have to admit a system that permits a plan to run out of money because it has a credit balance is broken. I agree that PPA 06 will be the end for most traditional corporate db plans within the next 10 years, but I also believe that was always the intent, not unforeseen consequence.

I am curious though, what was said at the EA meeting that sounded like the "key to the Rosetta Stone"?