UK - Attempts to heal the row within the actuarial profession over pension scheme valuation methods has suffered a serious setback, following objections from Watson Wyatt.
Watson Wyatt partner John Hill – who is a member of the Faculty and Institute of Actuaries working party assembled to write a blueprint for calculating schemes’ assets and liabilities – has refused to sign the paper.
The paper will be put to the profession for discussion in May.
Hill is understood to have refused to put his name to the paper because the proposed “modern techniques” take an “overly prescriptive” approach to valuations.
As a result, Hill has produced his own “minority” paper and handed it to the profession’s investment committee.
Sources close to both camps say that their respective papers have received “substantial” support.
A Watson Wyatt spokesman said: “Those who supported the minority report see the role of consulting actuaries as advising clients on a holistic basis, seeking to demonstrate the range of possible outcomes given the investment possibilities open to them.
“This includes investment in equities, and we do not believe the minority report is a minority viewpoint with the profession at large.”
However, a member of the profession’s working party – who declined to be named – said: “We are disappointed.
“We have been trying to get a paper that did encompass the view that just because you have a bond-based measure for looking at liabilities, it does not imply that you have to invest in bonds.
“Some schemes might be strongly funded or have a strong parent company and can do whatever they want anyway.
“We were disappointed that while we were trying to get those core points over, John just wouldn’t agree to it.”
At the same time, the profession is updating its guidance notes, which would force actuaries to disclose schemes’ discontinuance positions in every actuarial valuation.
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