Year: 2014

A satirical comparison of the Australian retirement income system and flying to London

AustralianActuary Life

Recently, I needed to travel to London and so I began my preparations with a phone call to an airline that I hadn’t used before but that I was keen to try, given its appealing advertising.

“Good morning, this is Margaret and how can I help?”

“Good morning, Margaret, I’d like to book a ticket for a flight from Melbourne to London at the end of next month. My name is David.”

“Well, David, I can help, but before we talk about where you want to land, can I ask how much you want to pay?”

“Well, whatever it takes, I suppose. What’s your price?”

“I’m sorry, I can’t tell you that since that would be giving you advice. No, you must tell me how much you want to pay.” Continue reading →

Wrong way – go back

AustralianActuary Economics

Most Australian freeway exit ramps have a sign directed at drivers who enter the exit ramp by mistake into the oncoming high speed traffic – “Wrong way – go back”. It’s not a bad warning. It is written in very large white text on a red background. Hard to miss, I suspect, even for the myopic drivers among us who presumably make this mistake from time to time.

I’d like to take those “Wrong way – go back” signs and use them in other parts of Australian life. In particular, the community needs to be warned that the suffocating policies of Governments, mostly of the left-of-centre type, to get involved in virtually every aspect of our lives right down to the most mundane, represents the wrong way. I don’t claim credit for the originality of the saying but it rings true – the left (or liberals in the US sense) have switched their efforts – they are no longer attempting to nationalise industries but instead are full steam ahead at nationalising the family.

Continue reading →

Sicilian actuaries and the force of mortality

AustralianActuary Economics

According to the old joke, while actuaries are able to tell you the number of people expected to die each year, Sicilian actuaries can tell you not only the number of people, but also their names and addresses. Last week I put up the shape of death curves in the ages after 65, according to Australian population studies. At roughly the same time, Mercer released a report indicating that it was the white collar workers who tended to live the longest. Continue reading →

The shape of death, retirement incomes policy and property rights

AustralianActuary Economics

result

The shape of death matters to policy makers, not so much to the individual. This image shows the number of expected deaths from age 65, based on a normalised starting group of 100,000 lives at birth.  The underlying data has been extracted from the Australian Life Tables, published by the Government Actuary. Two tables are plotted here, based on studies in 1995-97 and 2005-07. Continue reading →

The rising cost of #risk benefits in Australian #superannuation schemes

AustralianActuary Business

Most Australian super schemes provide benefits to members or their dependants on disablement or death. Typically, the cost of that insurance is deducted from the accumulated balances of the members. Those insurance costs are now rising rapidly almost across the board. Increases of 50% to 100% are common.

As a result, fund members will see large increases in the amount deducted from their balances to pay for the insurance. As a sad indictment on the engagement of members in their schemes and benefits, many fund members do not even know that they are insured.

The reason for the premium increases is clear – claims are higher than premiums collected. Continue reading →

Stakeholder analysis by #ASFA starts at the wrong end

AustralianActuary Business

In the December 2013 edition of Superfunds magazine, the CEO of ASFA, in her regular column, discusses the three major groupings of stakeholders in the superannuation system in Australia. In order, they were listed as 1) policy makers, 2) the general community and 3) individual fund members. When listing the fund members as the third group, the author said that individual fund members are “arguably for many, the most important”.

If I were writing that column, I would have reversed the order and dropped the “arguably” clause. Fund members are the most important stakeholders. The rest simply do not matter.

Continue reading →