At a glance:
- Condron believes the white paper will drive thinking in the months ahead
- Low levels of financial education and understanding of pensions remains biggest challenge
- Women increasingly taking on actuarial roles but still a long way to go to bridge the gap
The Association of Consulting Actuaries (ACA) has appointed its first female chair, Jenny Condron. Victoria Ticha speaks to her about the key pension issues that must be addressed and how to bridge the industry's gender gap
The consulting sector of the actuarial profession has experienced tremendous growth in recent years, reflecting a growing demand for financial skills and expertise. The Association of Consulting Actuaries (ACA) first opened its doors in 1951, and while it took almost 20 years to gain its first 100 members, it is now the largest national grouping of consulting actuaries in the world with 1,750 members from over 75 unique firms.
On 22 May, the ACA announced the election of Mercer partner and chief actuarial officer Jenny Condron as the body's first female chair. Taking office on 1 June, she will succeed Lane Clark & Peacock (LCP) senior partner Bob Scott when his two-year term finishes.
According to Condron, the organisation serves two primary functions: to provide education and support for its membership, and to respond to regulation providing input, consultation and practical solutions to complex pension problems.
Under the umbrella theme of ‘mind the gap', Condron outlines a number of pension problems she wishes to address during her two year term as chair of the ACA.
First, she points out that the minimum saving levels for auto-enrolment (AE) - currently at a total of 5%, but rising to 8% next April - must be tackled. "Retirement income adequacy is a key worry where both the Pensions and Lifetime Savings Association (PLSA) and Institute and Faculty of Actuaries have highlighted the need for action over the last year or so, building on the ACA's long-standing call for minimum AE contributions to be raised post-2019."
Current AE minimum requirement levels are too low and many people, such as the self-employed and low-income earners, are excluded. "We've got to make sure we have members and their adequate retirement provision at the front of mind and that we're doing all that we can," she says. For example, Australia has made big strides in terms of the relatively high level of savings and enables members to consolidate funds from numerous pots into one. In the context of defined contribution (DC), Condron suggests consolidation would be extremely helpful.
However, there is a lot of noise in the market surrounding pension scheme consolidation - particularly following the March publication of the government's defined benefit (DB) white paper - with a couple of consolidators, or ‘superfunds', already putting their stake in the ground.
Condron says this has raised the question: "Are those superfunds tackling the problem that the white paper is trying to address, or are they simply trying to find another route for employers to secure their member's benefits at a cost lower than a full buyout?" She continues: "That's obviously a key challenge the Department for Work and Pensions (DWP) is going to have to grapple with… there's an awful lot more we need to understand surrounding the options offered by these superfunds."
Workforce management issues, social care provision and the gap between DB and DC pension taxation needs to be closed. "Is it fair that the outcomes for DB and DC members can be so different under the lifetime allowance in place or that DC members can suffer penalties for investment outperformance? And, does anyone fully understand and reliably administer the rules now in place? Over the last few years, the ACA has made representations and provided guidance to government on how the pension taxation regime could be simplified; we will continue to do so," she says.
Finally, as millions of people still rely on DB provision, they must see their pensions delivered - with the sponsors of those schemes also supported by way of helpful and proportionate regulation. "The ACA and its members have a big role to play in all of these areas and in responding to the recent white paper," says Condron, adding this "will drive thinking in the months ahead".
Ticking time bomb
While the white paper covered a lot of ground, Condron notes that one of the pieces that was missing concerns benefits simplification. Low levels of financial education and understanding of pensions could be a "ticking time bomb" and must be addressed. Developing simplified member communications, dashboards and work by organisations in this area will be welcomed as messages need to be simpler, more direct and targeted, as well as connecting with all ages.
"ACA members have years of experience in helping to design and communicate pension arrangements with high participation levels," she says. Ultimately, "that's why are we all here, to ensure that members' benefits are settled at retirement… and with a simpler form, we stand a chance of helping members understand what their total retirement saving actually is and to help them take the next step which is understanding ‘do I need to make more provision so that I can actually afford to retire?'"
She believes this is one of the major looming problems of AE - unless members are encouraged to make adequate savings they need in retirement, they will not. People can no longer rely on their sponsor providing them with a healthy DB scheme. As a result, Condron says increasing individuals' understanding of what their total retirement saving provides is absolutely critical.
"If we can make headway in providing input to the consultations which are going to come out of the white paper - as well as supporting initiatives from people who are trying to progress things like the pensions dashboard and clearer, simpler benefit communication to members - then we'll achieve a great deal," she says.
Overall, 20% of the ACA's volunteer membership are women, but, for newcomers the number is closer to 40%. Still, there are so few members who are women, confesses Condron. While things have progressed in the last 30 years, there is still a long way to go.
Condron worked part-time for a number of years, and like everybody, she had to make compromises. The reality of the profession is that meetings have to be run after working hours, and unfortunately, this means many simply cannot make it. "As a profession, we need to find more ways of mentoring women through that difficult period of their lives. We lose most people just as they're coming out of having children," she says. Flexible meeting hours could be one way to tackle the gender gap.
Of course, Condron looked to her role models for inspiration, and she admits to following in the "very large footsteps" of industry leaders such as Aon Hewitt partner Jane Curtis and LCP partner Fiona Morrison. Persistence is key, she says. "If you just keep gritting your teeth and finding opportunities to get involved, it's possible to rise through the profession."
"If I can do anything to help show that you can juggle being a working mum and being a role model of any sort - you can survive the juggling and being pulled in different directions and come out intact - that would be a success," she says.
While it is continually depressing for Condron when she walks into meetings with large groups of actuaries and women are still very much the minority, many of the ACA's past presidents are her good friends and strong advocates for women. And, as everybody is working in that direction, she no longer feels as intimidated as she did when she first started.
"I strongly believe the ACA's members' input is needed to best resolve outstanding challenges that worry the public, businesses and the industry as a whole," she concludes.