Following his work experience with Actuarial Post student Max Kellar interviewed Paul Rogers, Head of  Pensions Risk at BT, and gains an insight into why and how he became an actuary and discusses his past and current actuarial roles.
Q: Could you first tell our readers how you first became an actuary? Was it a love for mathematics or did you have alternative interests at first?
A: I wasn’t someone who had plans to become an actuary from birth, but I had always had an interest in numbers. I took a degree in economics as it was of most interest to me at the time I left school and it also kept my career options open. At university when I looked into applying for jobs, becoming an actuary was the one career of most interest to me in terms of the numerical side of things and the fact that there would be good career prospects.
Q: How did you qualify to become an actuary? Did you have to go through many stages of exams for qualification?
A: My first company had a good study package whereby you got a day off a week to study, you got your materials paid for and assistance to go to tutorials if you wanted them. There is no time limit on passing the exams, so you can do the exams as quickly or as slowly as you like. I qualified reasonably quickly in 4 years, which involved quite a bit of work to get through that process.
Q: Has that process changed in recent years since you have been an actuary? Is it constantly changing?
A: The exams do change relatively regularly, but it’s the same principles and the same skills involved. I think the exams have generally improved over the years - for example,there is now a spreadsheet modelling course which didn’t exist when I started and is a much more relevant course today. When I started studying,the exams for pensions, life insurance, general insurance and investment relied on knowledge of the UK specific technical legislation that most qualified actuaries would use a very limited proportion of. This detail was taken out soon after I started studying and alsoimproved the exam system.
Q: Your role is in Pensions Risk, could you elaborate a little on what is meant by that and what your everyday work entails?
A: The work I do largely relates to BT’s defined benefit pension schemes. My day to day role involves considering the risks of the schemes – for example, how long people will live for – monitoring that risk and looking at ways of managing or mitigating those risks.
Q: Is it also the financial calculation in terms of what needs to be paid?
A: Yes, the funding of the pension scheme is a large part of my role.Every 3 years, a valuation is made of the scheme to assess future cash contributions for the pension scheme. This will look at how much we need to have set aside to pay the pensions that have been promised to members, based on assumptions such as:whatfuture investment returns will be and what future inflation will be.For BT, the market capitalisation is approximately £15 billion and the pension scheme liabilities arearound £40 billion, sochanges in the liabilities have a big impact on the Company and it’s important to get this right.
Q: Could you just tell me what’s meant by auto-enrolment and what’s involved in that?
A: Auto-enrolment is a government initiative looking to encourage pensions saving. This is being introduced from 2012 and works by automatically enrolling employees in a pension scheme unless they choose to opt out. One interesting element is that if you do opt out, then every three years the employer then has to reenrol you. It will be interesting to see what take-up levels will be and whether member inertia means opt-outs are relatively low.
Q: How would you say that your job and the job of actuaries in generalhas changed since you began in the profession?
A: I suppose it’s changed quite a bit – particularly technology. It wasn’t long before I started working that valuation programmes had to be to run overnight for larger pension schemes. Now those calculations can be done in seconds, so the technology has made things much simpler, which means the role of an actuary is a lot less about doing the numbers than it was before with a lot more focus on communication.
Q: Has the importance of the role of the actuary grown since you started? In particular in the areas of risk and pensions?
A: I think people have a much better understanding of pensions risk now. Even 10 years ago, there was a lot less focus on pension schemes. Now there is a much greaterinterest; company accounting standards put pensions onto the balance sheets and companies and investors apply a lot more time to pensions than they ever used to.
Q: How do you think, if at all, the current crisis between Britain and Europe concerning the euro will affect the job of actuaries?
A: There are a number of impacts on our day to day work - for example the impact on current asset values and views on future investment returns will affect both the assets and liabilities. The situation with Europe and more generally the world economy is one to keep a close eye on and with so much uncertainty around, the role of actuaries is to help communicate the potential impacts of the various risks.
Q: What would you say are the key factors which affect the job of an actuary? So what collapsing or expanding would increase or decrease the difficulty of an actuary’s job?
A: One of the current challenges at the moment for actuaries, especially in the pension’s field, is the current level of gilt yields.They are at historic lows at the moment and as they affect views on future returns, they have a significant knock-on impact on the level of liabilities. There is a question on whether it is realistic for the current levels of yields to continue in the long term and, therefore, how this should be allowed for when valuing liabilities.
Q: Finally, what does 2012 hold for both your job in Pension and Risk in BT, and the actuarial job as a whole?
A: For me, our scheme valuation iscurrently being carried out and a key focus for BT is agreeing with the trustees of the pension scheme what cash contributions will be paid in over the next few years. But for 2012 the actuarial professionfaces the challenge of advising under the current economic environment. Personally, I’ll also be interested in seeing how auto-enrolmenttakes off towards the end of the year.
Max Kellar is a student at Merchant Taylors' and is exploring possible career paths before attending University
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