Why You Shouldn't Become a Pension Actuary

As an actuarial student, you have probably contemplated whether you should specialize in Life Insurance (Life), Property & Casualty Insurance (P&C), or Pensions. If you’re thinking Pensions is for you then look no further, because you'll be heading into an industry that is set for an early retirement.

Pension Plans: An Outlook of a Dying Industry

        In order for a designated pension plan to be validated by the government, an actuary must sign and recognize that all calculations and assumptions are mathematically correct, backed by data, and in full compliance with the law (Actuarial Consulting Group 2010). However, all that number crunching depends on the type of pension plan. A Defined Benefit (DB) Plan is one in which a certain lump sum is targeted for retirement (ibid), which means that an actuary must valuate what contributions are needed to fund those future liabilities. On the other hand, a Defined Contribution (DC) Plan is one where the contribution made is set (OSFI 2018). Since contribution payments are predetermined, this indicates that there is little need for actuarial services for DC Plans. 

Unfortunately, companies find DC Plans more attractive, as there are less financial obligations that need funding, appearing to be a new trend among companies when selecting a pension plan for their employees. Companies are thus choosing DC Plans over DB Plans, making an actuary’s role obsolete in the Pension industry. Pension actuaries need to find an alternate way to survive, or their job will be signed under a death warrant.

Future for Pension Actuaries

            Though the field of pensions is fading away, there is hope for actuaries within this field. The valuation process pension actuaries undertake is very similar to reserving techniques used by P&C actuaries, which happens to be a growing field (CAS 2018). Nevertheless, a pension actuary becomes a Fellow of the Society of Actuaries (FSA), whereas a P&C actuary becomes a Fellow of the Casualty Actuarial Society (FCAS); both varying in academic nature (Brea 2018). As a result, it would be difficult for an FSA to enter the P&C industry. Since Life actuaries become FSAs in their line of work, a Pension actuary would find it much easier to become a Life actuary than one working as a P&C.

            Though it may not be the greatest idea to enter the dying field of Pensions, there’s still a lifeline available for actuaries within the Life and P&C industries.

Works Cited

Actuarial Consulting Group, Inc. “Frequently Asked Questions.” Actuarial Consulting Services, 2010, www.acgactuary.com/faq.html.

Brea. “CAS vs. SOA. What's the Difference? Which Path to Choose?” Etched Actuarial, 7 July 2018, etchedactuarial.com/cas-vs-soa/.

CAS Student Central. “What Is a Property and Casualty Actuary?” CAS Student Central, 2018, www.casstudentcentral.org/about-our-profession/what-property-and-casualty-actuary/.

Office of the Superintendent of Financial Institutions. “Defined Contribution Plan.” Office of the Superintendent of Financial Institutions, 25 Jan. 2018, www.osfi-bsif.gc.ca/Eng/pp-rr/ppa-rra/Pages/dc-cd.aspx.