Wednesday, July 29, 2015
Actuaries - Buy One, Get One For Free
Lawyers, mediators and clients are sometimes surprised to learn that the provision of pension reports in divorce and dissolution matters is not in itself a regulated activity. Reports may be produced by individuals or firms who are regulated in respect of some or even all their activities, but in fact anyone can style themselves an expert and produce reports on matters such as pension sharing and offsetting.
Actuaries are the experts of choice when valuing pensions and complex pension sharing calculations are needed. They have a deep understanding of financial systems which along with their data analysis and mathematical skills they use to produce reliable professional reports. As a profession, actuaries are regulated in the UK by the Institute and Faculty of Actuaries. The IFoA maintains high professional standards in various ways, for example by setting mandatory CPD requirements. A robust disciplinary regime underpins the quality of actuarial work and promotes the integrity and competence of members.
Following a consultation process involving the actuarial profession and key stakeholders, the IFoA has introduced new professional guidance on the subject of Work Review. This now forms part of the professional standards that actuaries are required to meet. Although the guidance was published earlier this year it came into full effect from 1 July 2015.
While work review is not mandatory in all cases it is considered best practice where for example the outcome of an actuary’s work will be financially significant for the client. It would be difficult to argue that this does not apply to pension sharing and offsetting reports. As to timing, a work review must be carried out at a time when it is capable of influencing the conclusions and outputs of the work.
As a result of the IFoA guidance all actuarial expert witness reports should now be subject to scrutiny by another person, probably another actuary, before the resulting report is delivered to clients. At BDM, because our actuaries have followed this approach for a number of years nothing changes; neither our working practices nor our fee structure. Others are presumably reviewing their processes, or they should be.
Remember that these changes only relate to actuaries and particularly those who are members of the IFoA; reinforcing the confidence you can have in a pension sharing or offsetting report when it is signed by an actuary who is a Fellow of the Institute of Actuaries (F.I.A.) or Fellow of the Faculty of Actuaries (F.F.A .).