Transformation and Growth: The Pensions Market and Key Opportunities for the Actuary

To find out more about the opportunities in the pensions actuarial market, Oliver James Associates interviewed Carla Lakey, Partner at the award winning specialist pensions consultancy Lane, Clark and Peacock.

There have been multiple changes in the Pensions market recently. How might these changes present further opportunities for the Pensions Actuary to shape the market in the next 5 to 10 years?

The pace of change has been significant over the last few years. I re-joined the Actuarial field 4 years ago; the pensions landscape over that period has changed dramatically and with it came an abundance of innovation. We’ll see further change moving forwards. For example, insurance de-risking is constantly evolving and will continue to be a growth area over the next decade. Alongside this, the recent raft of new legislation that’s being embedded will contribute to more development in the area of Pensions Flexibilities and Freedoms. It’s an exciting time with further development in areas such as the second hand annuity market, Lifetime ISAs and the Brexit referendum, presenting potential opportunities for actuaries.

How do you see the skill set of the Pensions Actuary changing in the next 5 to 10 years as a result of transformation and growth in the market?

The skill set of the actuary has changed and will continue to change; it’s imperative to have a much wider, dynamic skill set with excellent communication and relationship management skills. Integrated risk management is an area that has received increased focus and will continue to do so. Actuaries need to hone their modelling skills and abilities to explain risk, not just in relation to pension schemes but also in the wider context of the sponsoring employer’s position. Understanding the bigger picture is a skill that all actuaries need to have moving forwards; from modelling risk better, explaining it better and actually having a fully comprehensive understanding of how pension schemes interact with an  employer’s position and its covenant.

In terms of specific skills, developing expertise in the de-risking  area will be particularly important as that market area expands and grows. For many actuaries, whilst they’ll have the fundamental underlying skills, it’s the wider skill sets associated with these projects such as being able to negotiate contracts in insurance transactions and understanding how to effectively engage with members  that will become prevalent. Given the great pace of change, I believe that it’s important for actuaries to have the capacity and flexibility to adapt to frequent changes.

Will we see the Pensions Actuary become much more strategic and operational in their role within the next 5 to 10 years?

Absolutely. Pensions actuaries are required to build collaborative relationships with trustees and sponsoring employers in order to deliver the strategic long term goals of a pension scheme. With the variety of options available for schemes, the actuaries’ role will be focussed on understanding and providing advice on the  most appropriate actions and strategy in a measured way. 

Are skill sets for the Pensions Actuary transferable across different geographical locations?

Some of the fundamental skills you learn as an actuary, such as report writing and managing complex projects, are transferable not just across geographical locations but also across

industries as well; direct personal experience has shown me that. In terms of geographical transferability, actuarial mathematical concepts don’t change when you cross borders; what does change is the type and style of benefits offered to employees  and the local legislation and guidance which governs it. For any actuary there will therefore be a period of adjustment and learning.

What factors do you attribute to the growth of the pensions actuary?

There are a variety of factors; some are as a result of pensions actuaries innovating and creating new  solutions but others are simply due to external factors. The constant change and ever increasing demands in legislation have had a large part to play, as have the fact that scheme sizes have continued to grow in size as they have matured. Bigger schemes equate to greater risks and, especially in the current economic market conditions, these risks ultimately require more strategic management. Actuaries have responded to this by improving the technology, modelling and solutions offered to clients, creating greater demand for their expertise.

The role of the actuary is beyond numbers now. Generally, as an industry, we have become better at communicating and delivering information to the people that make decisions, from discussing the financial impact on the wider business to supporting engagement with employees around pensions issues.

What’s your biggest challenge around sourcing pensions actuaries?

LCP receives an abundance of applications across both our London and Winchester offices at the graduate level, but we do experience a greater challenge recruiting more experienced qualified and part qualified actuaries of the high calibre we are seeking– particularly in Winchester. Although our business has increased by 10% every year over the last decade, our future plans incorporate further growth meaning we need to expand and grow our teams at all levels across all locations to keep pace.

Actuaries generally perceive the Winchester office as a regional office with limited project opportunities and less scope to work alongside bigger clients. The reality is that this isn’t the case at all, reflected in the fact that there is no difference in our remuneration packages for Winchester and London. Our Winchester office works on a variety of household name clients and interesting projects and there is significant interaction between the two offices. From a personal perspective, you get to live in a city that was recently voted the best in the UK, with the potential to walk to work!

Is there still a perceived stigma around working within the pensions actuarial market? If so, how has this impacted the quality of candidates applying for roles?

Alternative fields such as insurance consulting or investment consulting appear to have a ‘sexier’ reputation, but for those of us working in pensions we do understand that there are a vast number of options available. I see a number of high calibre candidates and feel that’s because LCP are able to offer them great opportunities such as working on multi-billion pound deals with our market leading de-risking practice alongside other diverse roles. Whilst we do recruit across other actuarial departments at a graduate level, we haven’t had any significant drop offs in the number or quality of people applying to pensions actuarial overall.

How do you see a Pensions Actuary’s career progressing in the next 5 years?

Pensions is now such a diverse area that it is becoming increasingly difficult to become an expert in every facet. For example, alongside actuaries focusing on the traditional Scheme Actuary role, we will see people moving into specialised niche areas whether that be insurance transactions or more technical areas such as solving pensions taxation issues for senior executives. The changes in the pensions market will undoubtedly present new opportunities for the actuary; for example, new liability management options as a result of the second hand annuity market or, depending on what happens with the Brexit referendum, potentially the introduction of a “risk manager” role as part of European legislation. With a wider option of roles available, we’ll see more actuaries hand picking areas that suit their personal skill sets and interests.

How are your teams structured? Are Pensions Actuaries purely focused on pensions or might they have a broader role?

We currently have seven teams split across our London and Winchester offices. Each team has a mix of analysts, associate consultants and consultants. Whilst the teams do work together, we encourage cross-team and cross-office working. The benefit of using this matrix approach is that more junior members of the team get to work with a variety of LCP partners, learning new ways of working and different practice areas. We also encourage people to have a broad mix of trustee and corporate work to understand the wider pensions picture. As individuals typically progress, they may find areas of specialty that they wish to develop. LCP provides key opportunities to work with teams in alternative fields too. For example, I am working on key projects with our DC teams and my colleagues are working with our General Insurance department on joint pensions and solvency II projects; there are always opportunities here to broaden your role.

We’ve also recently launched ‘LCP Entrepreneurs’, an initiative that’s open to the whole business. Those taking part are given time out of their usual working routines to get together, think creatively and innovate. For people that are interested in thinking outside of the box, it is certainly a beneficial and interesting project.

How important is it for LCP to build collaborative relationships with external recruitment partners?  

LCP recruits both directly and through recruitment agencies. Direct applications are usually as a consequence of established contacts or external meetings, immediately limiting the number of candidates applying for roles. Working with external recruitment partners helps us to widen the pool of potential candidates.

We are extremely clear on our company values, ensuring these guide the ways in which we advise our clients. LCP prefers to have a collaborative approach to business; we work closely with recruitment partners such as Oliver James Associates, who share similar values to us and spend time to understand and appreciate our working culture and objectives.

How do you stand out from your competition within the Pensions Actuarial market?

Lane Clark and Peacock has a number of differentiators. In a recent staff survey, over 90% of employees said that they were proud to work for LCP, a statistic which speaks for itself. For me personally, LCP offers fantastic opportunities to work on a variety of clients including established household names. At the same time, the business listens, ensuring that individual voices are heard.

Our excellent training and development programme speaks volumes; we are committed to investing in people development and recognise that the future success of the business is reflected through the support and guidance we offer our employees. That’s why we always help our employees to achieve their potential.

Given that LCP is a partnership, the potential rewards for career progression are extensive. We also place great emphasis on technological innovation and are renowned for developing innovative solutions on behalf of our clients. The foundation to the latter is our commitment to developing long standing relationships with our clients. Being a fun, vibrant place to work is part of LCP’s strategic vision and we’re proud to have an extremely active social committee who organise multiple activities throughout the year for all our employees.

For further information on Lane, Clark and Peacock, visit www.lcp.uk.com

For career opportunities with Lane, Clark and Peacock contact Helen Kinloch – Consultant Pensions Actuarial - Oliver James Associates, +44(0)207 649 9353 Helen.Kinloch@ojassociates.com