Changing the Subject

[Gary]

SOmeone told me that on a TV news report of some kind earlier this week it was reported that actuary is one of the best professions of the future.

Regarding pensions, it seems large plans are terminating and freezing, and not many mid size companies are implementing new plans.

Is my perception that pensions are struggling correct?

When they report actuary as a great profession for the future do they just mean non retirement actuaries?

Any thoughts on these reports that have been coming out?

Thanks.

[david rigby]

Probably, it's mostly a survey of job satisfaction, with factors for compensation, lack of heavy lifting, etc.

Don't know if there are any factors for "future prospects".

[carrots]

For pension actuaries there is a lot of potential in cash balance plans. For non-pension actuaries there are opportunities in life, health, casualty, statistics, etc.

For all of us who love just messing around with numbers, it's hard to imagine a better profession!

Perhaps "the future ain't what it used to be," but I don't think that "the fat lady" is going to be singing for actuaries any time soon.

[Andy the Actuary]

In the 1970s, all you had to do was pick up the telephone to get business. Then, actuaries modernized assumptions (i.e., increased the interest rate assumption) and voilà, plans became subject to full funding. For the employers, that was great; for the money people, it meant no new money, which was not so great. Enter 401(k). The actuarial profession stood by while the money people emphasized the negatives of DB plans. Congress helped by advocating pension portability and 10 year vesting went away. All of a sudden, employers were doling out dollars to short-termer's. By the late 1980s, the IRS appeared to be on a revenue kick and began mulcting employers, often for innocent mistakes. Then, the accounting profession took over to add to the confusion and pain (Do you know that actuary is not mentioned in FASB87 other than discussion of whether or not the actuary should be disclosed?). All the while, actuaries argued over arcane rules rather than working to promote DB plans. Layer upon layer of draconian and incomprehensible laws generated little value at a great expense. The ultimate answer to protection has been disclosure and more disclosure whereby assembly line workers in Bourbon, Missouri are handed 14 page election packages. An employee can hit the gambling boats and expose his family without their knowledge or input to financial ruin, while an employee must obtain his spouse's signature to take out a $5,000 loan of his own money. Finally, PPA coupled with economic Armageddon has all but nailed the coffin shut. Insurance is based upon volume and spreading the risk and yet laws to protect one of the nation's largest insurers, the PBGC, have worked to diminish rather than increase the number of insureds. Whatever happened to the sound practice of advance-funding benefits? We are faced with the prospect of telling clients what they should do because we can't explain how laws operate, let alone agree among ourselves how they work. And what are we faced with? More laws which create far more issues then they purport to resolve.

Yup, great profession.

I sincerely feel for those pension actuaries who are in mid-career. The fat lady is just warming up.

[Belgarath]

Andy - if you want to run for Congress to knock some heads together, you've got my vote!!

[Guest Eric.]

Andy - well done!

[Andy the Actuary]

Andy - if you want to run for Congress to knock some heads together, you've got my vote!!

Thank you. If elected as king, here is what I will do to revitalize the DB system

(1) Outlaw FASB158 for forcing employers to post liablilities for benefits not even earned and boxing employers into a corner by mandating the fiscal year end measurement date.

(2) Reinstitute 10 year vesting and graded 15 year vesting with provision for new schedule to apply to future accruals (from hire date)

(3) Allow plan to specify fixed interest rate and mortality table for lump sum benefit calculation using standard interest rates and mortality tables. This could be adopted without grandfather

(4) Eliminate top-heavy rules.

(5) A plan sponsor who in every year contributes no more than the PPA minimum (w/o regard to FSCOB) will not be subject to reversonary excise taxes upon plan termination.

(6) Eliminate quarterly contributions except possibly for the very large, unfunded plans.

(7) All PPA elections are deemed made by the plan administrator's signing the 5500.

(8) Eliminate the PBGC risk premium for plans with unfunded vested liabilities of less than $x million.

(9) Rescind PPA accelerated benefit restrictions except for "key" employees (HCEs would still be limited by 401(a)(4)).

(10) PPA amortization would be changed to 15 years.

(11) Inform all government bodies that their role is to audit and not to punish.

(12) Eliminate spousal consent requirements (or alternatively, allow cigar smoking in government buildings).

(13) Eliminate every other burdensome and uncessary requirement I haven't thought of.

[Guest Eric.]

I almost can't believe you were remise enough to overlook the formalization of a mandate for the inclusision of PEZ (along with a new PEZ dispenser) in every enrollment kit.

Don't fret, you still have my vote, though.

[Andy the Actuary]

I almost can't believe you were remise enough to overlook the formalization of a mandate for the inclusision of PEZ (along with a new PEZ dispenser) in every enrollment kit.

Don't fret, you still have my vote, though.

I use my boyhood PEZ dispenser that sports the head of Andy Devine to bookmark the appendix of Jordan that displays the 1958 CSO table.

[tuni88]

Andy - if you want to run for Congress to knock some heads together, you've got my vote!!

Thank you. If elected as king, here is what I will do to revitalize the DB system

(1) Outlaw FASB158 for forcing employers to post liablilities for benefits not even earned and boxing employers into a corner by mandating the fiscal year end measurement date.

(2) Reinstitute 10 year vesting and graded 15 year vesting with provision for new schedule to apply to future accruals (from hire date)

(3) Allow plan to specify fixed interest rate and mortality table for lump sum benefit calculation using standard interest rates and mortality tables. This could be adopted without grandfather

(4) Eliminate top-heavy rules.

(5) A plan sponsor who in every year contributes no more than the PPA minimum (w/o regard to FSCOB) will not be subject to reversonary excise taxes upon plan termination.

(6) Eliminate quarterly contributions except possibly for the very large, unfunded plans.

(7) All PPA elections are deemed made by the plan administrator's signing the 5500.

(8) Eliminate the PBGC risk premium for plans with unfunded vested liabilities of less than $x million.

(9) Rescind PPA accelerated benefit restrictions except for "key" employees (HCEs would still be limited by 401(a)(4)).

(10) PPA amortization would be changed to 15 years.

(11) Inform all government bodies that their role is to audit and not to punish.

(12) Eliminate spousal consent requirements (or alternatively, allow cigar smoking in government buildings).

(13) Eliminate every other burdensome and uncessary requirement I haven't thought of.

#13 - Dear King, Please do away with the apparent requirement of .9 cents in gasoline prices. I'd prefer you mandate a reduction of .9 cents per gallon but will bow to your wish if you must raise the price by .1 cent.

Beseechingly,

Your humble servant and toady tuni88

[Gary]

Some good analysis provided.

Bottom line is:

Economic times are rough ... with many people losing jobs.

Are pension actuaries safe today ... or tomorrow (i.e. in the years to come) for that matter? Who Knows.

I'm 47 years old and have been toiling in the pension and benefits field for 25 years (since the summer of '84); first as an actuarial student and then as a pension actuary. I've been working for companies ranging from the top international consulting firms to self-employed (non traditional pension work) and much in between. I've worked on public plans, small plans, large plans, union negotiated plans, non qualified plans and so on.

We've seen a lot of change over these years. Good times and difficult times.

It's fair to say that the defined benefit pension world essentially began to atrophy right about the time I entered the market in 1984. Not many pension actuaries younger than me it seems and for obvious reasons.

I am currently a small plan pension actuary at a tax law firm.

I don't know what the future of my firm is, let alone my own at the firm.

So the question is: How to I prepare for an uncertain future?

One consideration is to prepare myself to be a free lance pension actuary. Obtaining contract work, my own clients, and a general mixed bag of pension actuarial projects.

Given my current post, and the subject matter of this thread:

What do you - the general pension actuarial public think the best options ahead for us are?

Of course, this was essentially triggerred by the media concluding that not only is an actuary one of the best professions, but it also has the brightest future for future job opportunities.

Thanks.