Changes Needed to Actuarial Practice

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(Note: Where available, an online link to the resource is provided; in some cases, we are only able to provide the reference information)

• Defined Benefit Plans Accounting, and Funding–Financial Economics vs. Pension Tradition

This outline attempts to compare the approach of financial economics with the more traditional approach of pension practitioners. It discusses the merits of each and the implications of a possible change in traditional thinking.

• Financial Economics and Actuarial Practice

This paper examines concepts from both financial economics and actuarial science as applied to defined benefit schemes, and finds that many standard modes of actuarial thought are, in fact, indefensible when examined with the tools and techniques of financial economics.

• Financial Economics and Pension Actuaries: The U.K. Experience

Presented at "Current Pension Actuarial Practice in Light of Financial Economics Symposium" in June 2003, this paper looks at how the U.K. actuarial profession has still not come to a single view on financial economics, and the major divisions that remain continue to hamstring its policy development.

• Fixing the Pension Plan Funding Rules

This paper traces the factors that influenced the funding rules, established in 1974, that apply to most voluntary U.S. employer–sponsored retirement plans. It follows the evolution of the rules, identifies their shortcomings, and proposes principles for revising them, as well as a set of revised rules.

• Pension Forecasts, Part 2: The Model Has No Clothes

(page 14)
This article addresses a simplified problem in pension plan financing and examines two questions about how that pension plan can be modeled.

• Pensions, Funding and Risk

An identification of the economic system in which occupational pension schemes operate, including all parties to the pension arrangement, particularly the members of the scheme and the shareholders of the sponsoring company.

• A Primer in Financial Economics

Provides the reader with an overview of the first 101 years of financial economics, with particular attention to developments of special interest to actuaries.

• Radical revision of the actuarial pension model needed

(page 13)
An interview with Larry Bader, co–author of the article "Reinventing Pension Actuarial Science" (Pension Forum, January 2003).

• A Re-evaluation of ASOP 27, Post–Enron: Is It An Adequate Standard of Professionalism?

This paper calls for a reconsideration of ASOP 27 in the wake of the scandals that began with Enron and have rocked the world of finance.

• Reinventing Pension Actuarial Science

(page 4)
The 1974 passage of ERISA revealed fundamental flaws in the actuarial pension model. This article explores those flaws and the injuries they cause.

• What's Wrong with ASOP 27? Bad Measures, Bad Decisions

This paper addresses the shortcomings of ASOP 27, as a statement of actuarial and economic science.

• Why Pension Fund Management Needs a Paradigm Shift

This paper asserts that the management of defined benefit (DB) plan assets requires a new paradigm to replace the simple three-part paradigm that has long been used.