What are actuaries good for?

WHAT ARE ACTUARIES GOOD FOR?

LSE Old Building – 11th October 2016

PAST

Expelled from SchoolRead English at Cambridge Worked on a trawlerSold insuranceHead of Sales at Zurich

FUTURE

Director of First ActuarialFounder of

www.pensionplaypen.comBlogs at

www.henrytapper.com@henryhtapper07785 377768

HENRY TAPPER (PENSION PLOWMAN)

WHY BECOME AN ACTUARY? (WHAT AN ACTUARY WOULD SAY)

3

Reward

Variety

Influence

Intellectual

satisfaction

NetworkSuppor

t

International

opportunities

High standard

s

WHY BECOME AN ACTUARY? (WHAT I SAY)

4

5. Diversify

and conquer

3. Democratise Pensions

4. Aid Freedom

and choice

6.Price Insurance

7. Work for us

8. Win your quiz night

1.Change the world

2.Manage the

message

1. CHANGE TH

E WORLD

“ L I VE T

H E DR E A M –

YO U ’ R

E ON LY Y

O U N G

O N C E ”

CHANGE THE WORLD!

CREATE GENERATIONAL FAIRNESS!

MEASURE MORBIDITY

FEED THE HUNGRY

PREDICT PANDMEMICS

UNDERSTAND CATASTROPHE

How can we better understand these risks and manage them

2. MANAGE TH

E MESSAGE

“ D E S T R O Y TR U M P ”

MANAGE THE MESSAGE

DESTROY TRUMP

3.DEMOCRATISE

PENSIONS

W I DE N P

E N S I ON T

A K E UP

AN AUTO-ENROLMENT CAPACITY SOLUTION

MANAGING THE DIFFERING BEHAVIOURS

PENSION A PENSION

QUOTES FROM PROVIDERSAs well as viewing these quotes online you can download them along with factsheets on each provider as a PDF.

DETAILED GUIDANCE ON EACH PROVIDER

REPORTS AND DUE DILIGENCEOnce you have completed your work and chosen a pension you will get an actuarial certificate from First Actuarial. This certificate warrants that you have followed due process and chosen your pension with due diligence. Along with this you can download your pension offers and workforce assessment.

4. AID FR

EEDOM AND

CHOICE

“ G E T PE O P L E P

E N S I ON W

I SE ”

WHAT’S HAPPENING AT RETIREMENT?

CHAMPAGNE MOMENTS DOUBLE IN A GENERATION!

WE’VE GOT FREEDOM AND CHOICE!

BUT WHAT CHOICES DO WE REALLY HAVE?

THE PERILS OF DRAWDOWN

28

with the tax muppetometer

29

with the tax muppetometer

30

with the tax muppetometer

31

The small print We have used 2015/2016 tax allowances, ignored investment returns and inflation and not tried to predict how HMRC might bend the rules in the future, which they undoubtedly will. Allowing for these might change the numbers a bit, but would also make the model less user friendly although we doubt the underlying messages would change. Namely, spreading your DC pot over a number years will, for most people, mean paying less tax.

with the tax muppetometer

DIVERSIFY AND CONQUER

“ S M O O T H TH E I N

V E S T M E N T PA T H W A Y ”

INVESTMENT A – MARTIAN PRIVATE EQUITY

1 2 3 4 5 6 7 8 9 100%2%4%6%8%

10%12%14%16%

Return on Investment A

Return each year Average return - μ

Year

Retu

rn –

ri

The annual sample standard deviation for this investment is 7.4%

Standard Deviation

Expected Return = 7% pa

INVESTMENT B – LSE BONDS

1 2 3 4 5 6 7 8 9 10-4%

1%

6%

11%

16%

Return on Investment B

Return each year Average return - μ

Year

Retu

rn -

ri

The annual sample standard deviation for this investment is 3.2%

Standard Deviation

Expected Return = 3% pa

THE MATHS

LSE BondsExpected return:

Sample Standard Deviation:

Martian Private EquityExpected return:

Sample Standard Deviation:

2% 3% 4% 5% 6% 7% 8%0%

1%

2%

3%

4%

5%

6%

7%

8% Investment A - Equities

Investment B - Bonds

Expected Return vs. Risk

Standard Deviation

Expe

cted

Ret

urn

50% EQUITIES AND 50% BONDS

1 2 3 4 5 6 7 8 9 10-2%0%2%4%6%8%

10%12%14%16%

Return on Investment

Return each year Average Return

The annual sample standard deviation for this investment is 2.1%

Standard Deviation

Expected Return = 5% pa

THE MATHS

Expected return:

Sample Standard Deviation:

1% 2% 3% 4% 5% 6% 7% 8%0%

1%

2%

3%

4%

5%

6%

7%

8% Investment A - Equities

Investment B - Bonds

50/50 split ofinvestments

Expected Return vs. Risk

Standard Deviation

Expe

cted

Ret

urn

1% 2% 3% 4% 5% 6% 7% 8%0%

1%

2%

3%

4%

5%

6%

7%

8% Investment A - Equities

Investment B - Bonds

50/50 split ofinvestments

Expected Return vs. Risk

Standard Deviation

Expe

cted

Ret

urn

6. PRICE IN

SURANCE

“ K N O W TH E V

A L U E OF R

I SK !

INSURANCE PRICING CONSIDERATIONS

Factor 3

Factor 1

Factor 2

£££

Age

Sex

Type of Car

Where kept

Alarm

Mileage

Endorsements

Marital Status

Job

Home Addres

s

No Claims

Policy Type

Multi-Car

Excess

“Pass-plus”

Use

0%

5%

10%

Risk vs Age of driver

Age

Prob

abili

ty o

f Acc

iden

t (pa

)

Frequency of different sized claims - 20 year old

Size of Claim

Accid

ent F

requ

ency

Frequency of different sized claims - 50 year old

Size of ClaimAc

ciden

t Fre

quen

cy

Expected Claim size vs Age

Age

Expe

cted

Cla

im S

ize p

a Probability of claim

XExpected size

of claim

7. GET A

JOB

“ W O R K FO R U

S ”

WHAT DO EMPLOYERS WANT?

–A good academic record – usually a maths A level at Grade A*, A or B, and a 2:1/1st at degree level

–Work experience/internships

– Good communication skills

– IT skills

–An interest in business/relevant industry knowledge

– Commitment to the exams and your career

– Enthusiasm

MY TIPS

Try and get Work Experience In my opinion, more important than a First Class Degree

CV and Covering Letter Well presented Clean, clear language Checked by someone else

Interview Be prepared… smile… ask questions… enjoy yourself

WHO SHOULD YOU WORK FOR?

– First Actuarial LLP

– Pension Consultancy Services

– Young and Growing

– Offices in Basingstoke, Leeds, Manchester, Peterborough, Tonbridge Basingstoke

 Tonbridge

Peterborough

LeedsManchester

ANY QUESTIONS?

WHERE CAN I FIND OUT MORE?Visit:

www.actuaries.org.uk/becoming-actuary

E-mail: careers@actuaries.org.uk Facebook:

www.facebook.com/Actuarial IFoA brochures

Comments

QuestionsOR…

Speak to your Careers Adviser

Contact a Careers Ambassador - www.actuaries.org.uk/becoming-actuary/pages/career-ambassadors

8. WIN YO

UR QUIZ NIGHT

N O PR I Z

E S – N

O LO S E R S

1) What was the total deficit of all UK defined benefit pension schemes at 30 June 2014?

A: £200m

B: £200bn

C: £200trn

2) What is your State Pension Age?

A: 62

B: 65

C: 68

3) Roughly how much would a 22 year old graduate trainee, aiming to retire at 65 on an annual pension of £30,000, need to save a month?

- assume 6% investment return a year

- cost of purchasing an annuity at 65 = £30 buys £1pa pension

A: £400 per monthB: £600 per monthC: £800 per month

4) What age is a woman currently aged 21 expected to live until?

A: 87

B: 90

C: 93