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It’s been a busy few months for the IFoA – we’ve hosted the launch of the independent State Pension age review, elected our new President-elect, Jules Constantinou, and attended the IAA meetings in Budapest. And no sooner had we in the UK returned to work after the long Easter weekend to settle back into the ongoing Brexit negotiations, than we were thrown back into election mania as the Prime Minster called a snap General Election.
As part of our commitment to promoting the public interest and driving thought leadership, we identified Intergenerational Fairness as an increasingly pertinent policy area the IFoA should address. And this theme looks likely to be a key battleground in the upcoming election, with all main parties divided on, for example, the pensions triple lock. Over the course of 2017, the Policy team has been working on its three-part Intergenerational Fairness bulletins to raise awareness of the risks posed to both current and future generations by not considering the long–term implications of societal, environmental, and technological transformations.
We will launch our second bulletin on the subject of retirement today, which will provide a variety of perspectives on retirement with contributions from former government ministers, industry experts, and think tanks as well as members of the actuarial profession. If you missed our first bulletin on climate change, you can watch videos of the contributors to the bulletin by clicking here.
As you will see throughout this newsletter, we continue to strive to inform the debate and influence policymakers on behalf of the actuarial profession and never is providing robust, independent evidence more important then when the country is gearing up to go to the polls. If you have any questions about any of the items in this newsletter, ideas for future policy work, or suggestions for how we could improve, please do get in touch by emailing us at policy@actuaries.org.uk.
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On 18 April, Prime Minister Theresa May announced a General Election, to be held on 8 June. Parliament dissolved on 3 May, and during the election campaign period, Whitehall is in ‘Purdah’, which prevents government from making announcements about any new or controversial government initiatives.
The General Election has certain implications for the work of the IFoA. The Purdah period means that some Green Papers we were expecting to be issued are now on hold, for example the one on Social Care Funding. In addtion, certain speakers for our upcoming events had to cancel, for example Pensions Minister Harrington had to cancel his key note at our Joint Investment, Pensions and Insurance Conference (5-7 June).
But the Purdah period also provides opportunities for the IFoA. As you may have seen in the news, some election campaign issues are reaching newspaper front pages, such as the debate around the 'Triple Lock' or social care funding. The IFoA has in the past published papers reviewing the system, and we are planning to issue those conclusions again. You may recall
the press release we published early last year.
Now that the political parties have issued their manifestos, we will analyse them against the IFoA’s Key Policy Priorities and share our conclusions with the IFoA membership and beyond.
After the elections we will await any new ministerial appointments, as well as appointments of any new Chairs of Parliamentary Select Committees, and send them letters of congratulations. This will help the IFoA build relationships, which may lead to more opportunities to provide evidence to policy makers in the future.
We will keep you posted!
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This is the second of the IFoA’s three part series on Intergenerational Fairness focusing on the future of retirement and pensions in the UK. A number of contributors to the bulletin will present their work, followed by a panel discussion and Q& A. If you would like to learn more about intergenerational fairness series, click here.
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Taking into account the impact of stakeholder perspectives and system characteristics, the risk principles document is a high level guide to risk management designed to help reduce losses, control uncertainty, and optimise decision making. On 21 June, experts will discuss how these principles can be applied to three prominent issues with an international remit.
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In a world that is seemingly changing at a faster rate than ever before, so are the risks posed to organisations and individuals. The insurance products that help to protect us against these risks, must also evolve in order to remain relevant and continue to provide an important societal safety net.
New public policy challenges are arising under a number of key headings:
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Societal – changes in demographics; globalisation and changing insurance exposures; the sharing economy; societal instability such as terrorism or riots
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Technological – data science; telematics; wearables; genetic testing; cyber risk; autonomous vehicles
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Environmental – adverse weather events and natural catastrophes, including, but not limited to, flood; prevalence of environmental disease / pandemics
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Economic – recessions, low interest rates; underinsurance
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Political – political and policy decisions made that could have huge ramifications for all areas of insurance e.g. social care reforms and the effect of Brexit on regulation and practical running of the insurance business
Understanding the uncertainties caused by these transformations will demand broader approaches to identifying, measuring and managing risk, and greater innovation by insurers.
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On 12 May, the IFoA issued a Risk Alert for all members to ensure that they understand, and communicate, the extent to which they have taken account of climate-related risks in any relevant decisions, calculations or advice. Heralded by Mark Carney in 2015 and chaired by Michael Bloomberg, the Task Force on Climate-related Financial Disclosures’ published a recommendations report seeking to address the consequences of climate change on businesses. With this guidance in mind, we have developed a number of items in order to encourage members to keep up-to-date with the risks developing in this area.
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On 27 April, we were delighted to host Dame Sally Davies, who delivered a lecture on Antimicrobial Resistance and why AMR has developed to such an extent that it is now a threat to society. Professor Davies also highlighted ways in which actuaries as well as government, policymakers, and health care professionals should respond. A recording of this lecture will be available shortly and can be accessed by clicking the button below.
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On 10 May Tim Gordon of the IFoA’s Continuous Mortality Index (CMI), joined BBC Radio4’s Money Box to discuss the numbers around changing life expectancy.
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IFoA volunteers and members of the Executive Team attended the IAA Conference in Budapest last month. Volunteers represented the IFoA on a number of practice-specific committees, and the Executive Team attended the IAA Council and other governance-related forums, as well as engaging with other actuarial organisations present, on a number of key issues for the profession.
Many members attended the highly successful seminar around issues of mortality, organised by Brian Ridsdale, Chair of the IAA Mortality Group. As at the IAA meeting last November in Cape Town, there was again a large debate about the IAA education syllabus. We expect to receive the invitation for an electronic vote on the issue shortly. We are grateful to all those who were able to participate, and we hope for similar success at the next conference in Chicago later this year.
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Speaking out on behalf of the profession
During the month of May we have been busy working with various practice boards to respond to two significant Government consultations, the Ministry of Justice’s (MoJ) The personal injury discount rate: how it should be set in future and the Department for Work and Pensions Defined benefit pension schemes: security and sustainability.
After the Lord Chancellor announced that she would lower the personal injury discount rate from 2.5% to -0.75%, the MoJ issued a consultation in order to ensure this rate is fair for both defendants and claimants. Our response covered a number of important areas, including the importance of maintaining a risk-free market consistent discount rate and the value of PPOs in removing longevity risk from claimants.
Our response to the Department for Work and Pensions’ consultation on the future sustainability of private sector defined benefit pension schemes confirmed that the current regulatory framework remains suitable. However, we noted that employers and trustees could do more to use the flexibilities of the current system to provide security for members’ benefits, without the need to engage in a costly consolidation exercise.
Other consultations the IFoA recently responded to include:
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