UK - Actuaries continue to be taught palpable untruths and have been battered by accountants, a new survey of actuarial assumptions reveals.
The study - which is carried out annually by financial services giant PricewaterhouseCoopers - said performance of actuaries over the last five years had been one of change - and hence pain. And it cited the influence of accountants and the new accounting standard FRS17 as key factors.
It said: In 1998 the accountants challenged UK actuaries to prove their common assertion that equities have a higher correlation with wage-linked liabilities than bonds. Embarrassingly for actuaries, when they had crunched the numbers, the numbers supported the accountants' view. And out of this came FRS17, incorporating the long-held belief among financial analysts and academics that pensions are bond-like.
The report added: Actuaries have been battered in the thought leadership debate of the last few years. It has been a slogging match, not a knock-out. Worryingly for their clients and some would say the public interest, trainee actuaries in this country continue to be taught palpable untruths.
But PwC partner Jeffrey Rowney defended the report and said it had not been critical of the actuarial profession. He said: The key points are that actuaries are finally being forced to be more realistic. People are moving now to an accountant's view of the world.
PwC actuary Peter Tompkins added: Where we are really critical, is that we draw attention to the fact that there is still some resistance at recognising that risk is real. But much of what we have written, while critical about the need to have changed, is complimentary about the change having taken place.
By Paul Sanderson
This week's edition of Professional Pensions is out now
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