The Pension Section adopted an amended mission statement last year that emphasizes adaptation to change. Pension actuaries have become very used to constant change in our industry and practice, and the Pension Section strives to help its members keep up with change through the research and education it sponsors.
The way pension actuaries measure longevity and apply longevity assumptions to valuations has evolved significantly over the past few years. The Society of Actuaries (SOA) is publishing annual updates, whereas before we might have kept the same mortality table over a long period of time. Plan sponsors are choosing to review their own mortality experience and weigh the credibility of this experience to better estimate their liabilities instead of relying on industry tables that generally were required in the past. These changes have required pension actuaries to change their practice and brush up on skills they may not have used much since their formal education, such as credibility theory. The Pension Section has funded research and sponsored continuing education sessions or webinars on these topics to assist its members in adapting to the new normal.
Many public pension plans around the United States continue to face rising and volatile funding requirements for various reasons, including failure to make recommended actuarial contributions, lower future capital market expectations and the continued maturation of these plans. This has resulted in increased scrutiny regarding the perceived sustainability and affordability of these plans. In response, some public pension plans have made changes to benefit provisions or funding strategies, and many others are evaluating their best course for the future.
In order to assist plan sponsors and plan actuaries with determining the best future path, we have revived the Retirement 20/20 initiative—this time with a focus on public plans. We are asking for papers that provide realistic strategies for benefit design and funding practices for public pension plans—in full recognition of the environment in which these plans operate—including thoughts on how to transition from the current state. We hope these papers will elevate the discussion regarding changes to public pension plans.
Many pension actuaries have a desire to broaden their skill sets to be able to consult around broad retirement risks and plan designs. The Pension Section continues to add tools to its toolkit, including a recent paper regarding evaluating defined contribution (DC) plans in a methodical, quantitative way.
Discussion around state retirement plans and open multiple employer plans may further change how retirement benefits are delivered in the United States. Some Canadian provinces are experimenting with risk-sharing designs and paying variable benefits from DC plans, which may influence the future direction of other provinces or companies with regard to their retirement programs. However the landscape shifts, the Pension Section will strive to provide research and education to help its members adapt.