By Penny Bailey
As I write my first "Chairperson's Corner" in January of 2012, I find myself taking some time to reflect on the past. In addition to being a time for resolutions, January is also a time many of us ponder where we've been and where we're going. As we do, we grapple with struggles we've undergone, recall happy memories and consider what we may want to do differently in the future. I can't say that I've come up with any epiphanies or earth shattering resolutions, but I can say that it is a worthwhile exercise nonetheless.
As we reflect on this last year in the Pension Section Council, I want to say a special thank you to our departing council members. Kevin Binder, Evan Inglis, Lisa Schilling and Bill Sohn have made significant contributions to the work that the Pension Section is doing and we greatly appreciate their time and efforts. I also want to thank Eric Keener for his leadership as chairperson for the last year. Eric has one more year in his term on the council so we are fortunate to have use of his talents for a little longer.
The Pension Section Council also took the opportunity to do some reflection at a recent meeting. The council conducted a SWOT analysis of the Pension Section. For those of you not familiar with the term, SWOT stands for strengths, weaknesses, opportunities and threats. I'm sure each and every person reading this article would have interesting insights into the SWOT analysis as it applies to the Pension Section, and needless to say, so did the Pension Section Council members. While I don't have room in this article to share all the discussions, I will highlight some of the consensus points.
Some of the key strengths that we see in the Pension Section are the SOA's rigorous credentialing along with a positive public perception of actuaries in the pension area. In addition, the Pension Section has released a substantial amount of research that is current/leading edge and relevant and has sponsored a number of unique education sessions for pension actuaries through both the SOA Annual Meeting and multiple webcasts each year. The facts that pension actuaries typically have a variety of business skills and help manage numerous risks were also seen as key strengths.
A lot of the discussion of weaknesses centered on the volunteer nature of our organization. As you may or may not be aware, most of the work that the Pension Section does is spearheaded by numerous volunteers. We continue to struggle with too few volunteers, often spread too thin. In some cases, volunteers may have a perceived conflict of interest between their company objectives and the work of the Pension Section. Another weakness that garnered a fair amount of attention was the lack of awareness of the SOA research along with the theoretical nature of some of that work. There was also some concern regarding the need for better understanding of mortality and longevity issues both in and out of our profession.
There was no shortage of threats identified for pensions. It is no surprise that the government deficits and potential cuts to retirement benefit expenditures is a major concern. The state of underfunding and volatility of funding for defined benefit plans also threatens the remaining open plans. Actuaries in general, and pension actuaries in particular, have a reputation for making things overly complicated and perhaps have limited our abilities to expand into other areas. The Pension Section itself has been losing people to other professions and areas of interest.
Despite all the discussion of the weaknesses and threats, we believe that there are a lot of opportunities for our section. We believe that the current retirement crisis along with public plan issues can be leveraged to influence public policy. In some cases, we have opportunities to learn from parallel issues in other parts of the world. For instance, the United Kingdom seems to be a little ahead of where we are in the United States regarding pension issues–particularly on their analysis of longevity issues. We believe that the Pension Section would benefit from a "plain language" translation of the research that has been completed along with ideas for practical application. There are opportunities to expand the work that pension actuaries do by focusing on individuals' retirement needs, finding ways to transfer our skills to DC consulting and educating the public on retirement risks and financial literacy.
The Pension Section Council has taken the results of this SWOT analysis under consideration, and we are analyzing ways that we can either attack our weaknesses and threats or take advantage of the strengths and opportunities that exist. I look forward to sharing our progress in these efforts in future articles.
Penny A. Bailey, FSA, MAAA, EA, is chairperson of the Pension Section Council for 2012. She is a partner with Mercer in St. Louis, Miss. She can be reached at penny.bailey@mercer.com.