The Future for Pension Actuaries is Brighter than You Might Think

Stephanie Slowinski

Are you considering a career as an actuary and don’t know which direction to look? Have you heard that there isn’t a future for retirement actuaries? Has this made you think about looking in another direction? You may be making a mistake. The future for retirement actuaries is still very bright.

To prove this, I called upon Dean Kepraios, FSA, EA, MAAA, an experienced retirement actuary and principal in the retirement practice of Towers Perrin. Kepraios has been a retirement actuary for the last 13 years.

Is there still a future for the profession?

It’s true that the role of retirement actuaries is changing, but there is still a bright future ahead. The role of the retirement actuary is moving from a valuation-driven role to one focused on investment and strategic workforce planning –skills that retirement actuaries will continue to use. Retirement actuaries deal with decrement assumptions regarding termination, disability, retirement and death. As retirement programs change, retirement actuaries are still valuing benefits associated with each decrement assumption.

Even though some companies are freezing their pension plans,they still have retirement plans. In this case, retirement actuaries help plan sponsors see how these programs fit into workforce needs and what the alternatives are to address the gaps. They are also valuable resources in helping companies assess their talent management needs with regard to attracting, retaining and replacing talent, identifying critical spots and rewarding achievement. Companies that are freezing their pension plans and changing their retiree health care plans may soon realize that they’ve gone too far.

Are companies prepared to adapt to recent developments and pension legislation?

Retirement consulting firms are helping clients prepare for changes resulting from pension reform and how to address costs of all defined benefit plans–active and frozen. Companies cannot take away an employee’s accrued benefit, so proper investment management of plan liabilities continues to exist regardless of the plan being frozen. Being experts on the “liability side,” retirement actuaries are well positioned for playing a large role in this investment space.

With potential changes to Social Security and decreased emphasis on company-sponsored retiree health care benefits, education of employees and retirees is necessary. Retirement actuaries partnering with communication consultants can help educate employeesto plan for retirement. In a defined contribution-only mode, people may decide when to retire based on capital market positions and investment performance, but is it really the right timefor them to retire? Do they have enough money to retire?

Why should you consider a career as a retirement actuary?

Many retirement programs are large aspects of clients’ businesses and are, therefore, the focus of all levels–from the benefits manager to the chief financial officer–of the clients. Therefore, these plans should be managed like a subsidiary of a company. Being a retirement actuary means being involved in more than actuarial consulting. Instead, retirement actuaries are well balanced business consultants.

Do you have the skill sets that make you well suited to be a retirement actuary?

Becoming a retirement actuary requires a high level of quantitative skills, a strong business interest and a strong background in math and probability. More importantly, the career of a retirement actuary deals a great deal with finance and investing, accounting and risk management. If you just couldn’t seem to take enough finance classes in college, then you might enjoy working as a retirement actuary. They work with both human resources and finance representatives (treasury, financial reporting and analysis and investing). They need to speak to all of these audiences…leading us to the last but not least skill set, oral and written communication skills. Consulting is relationship based, so excellent communication skills are a must.

So the next time you hear those vicious rumors the retirement actuaries are on the way out, you’ll know that they’re far from true. There’s still a bright and exciting future ahead for retirement actuaries.