Posts Tagged ‘society’

SOA Panel States the Obvious – Though Not to Everyone

The New York Times reported today that a “blue-ribbon panel of the Society of Actuaries — the entity responsible for education, testing and licensing in the profession — says that more precise, meaningful information about the health of all public pension funds would give citizens the facts they need to make informed decisions.”

Basically the report made four very sensible recommendations that most citizens would be amazed had to even be recommended.  Anyone without ulterior motives should have no problem agreeing with three of them:

  • a plan’s funding goal should always be 100 percent
  • disclosure of a “standardized plan contribution” that would be calculated by all plans using the same discount rate and funding methodology
  • not using funding instruments that delay cash contributions (i.e. Pension Obligation Bonds)

Then there is the tricky, though no less valid, recommendation:

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Impolite Society

Individual actuaries don’t fight very entertainingly but actuarial societies and large actuarial firms guarding their bottom lines mix it up with a tad more vigor.

Public pension plans are going bankrupt in part because public plan actuaries whore their services to ignorant, ethically-challenged politicians and plan trustees.  However there has been scant scholarly research on this aspect of the crisis so in an April 17, 2013 new release:

To help further the dialogue on issues related to public pension plans, the Society of Actuaries [SOA] has commissioned a multidisciplinary blue ribbon panel to consider the causes of underfunding in public pension plans and make recommendations as to how governments can more securely fund plans going forward.

And what is the SOA committee likely to unearth?  To the the mind of Segal it can’t be good for their business so on July 3 they dashed off a letter to SOA president Tonya Manning basically telling her to butt out:

Developing guidance on the setting of actuarial funding policy is not within the purview of the SOA, but rather that of the American Academy of Actuaries.  The SOA intrusion into the policy development arena runs the risk of being distracting and counterproductive, especially in an already crowded field of interests who want to tell governments how to value their pension liabilities.

with your panel of idiots:

It is of particular concern that the membership of the panel lacks balance in both its funding policy views and public sector pension actuarial expertise.  The majority of the panel members has consistently  written and/or spoken, often based on flawed assessments, on the funded status of public plans.The solution suggested by many of the panelists to remedy funding deficits is to inject private-sector, market-driven accounting and valuation rules, albeit inappropriately, into public sector plan actuarial practices.

who have already reached their conclusions:

As a company that works with hundreds of public pension plans across the country, we are appalled at how this process has been compromised, and we are convinced it has been designed to reach very specific and preconceived conclusions.  It is unfortunate at best, and dangerous at worst, that the SOA took this route when a more thoughtful, inclusive, disciplined process would have better serve the public sector pension systems, public plan participants and the SOA membership to develop meaningful recommendations.

I’m not sure Tonya Manning has enough of the DL Hughley in her:

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but if she did we may see this dialogue ramped up a notch with the SOA response:

Fuck you, Segal.  We’re all sick of having to explain how public plans can give out million dollar pensions while putting in fifty bucks a year and how Detroit can have both a $600 million and a $3.5 billion underfunding and how every public plan reports 20% more money than they actually have and how your clients tell you what to do and you don’t raise a peep as long as their checks are big enough and don’t bounce.