About the IAA volunteer actuaries

Transcription

1

2

3 Introduction 3 Founded in 1895 as continuation of the Comité Permanent des Congrès d Actuaires Renamed IAA in 1968 Restructured in 1998 Based in Ottawa, Canada constituted in Switzerland Unique international organization dedicated to the research, education and development of the profession and of actuarial associations.

4 4 About the IAA Worldwide association of professional actuarial associations 68 FMAs* 30 AMAs* representing 63,000+ actuaries in countries 7 special interest Sections for individuals: AFIR-ERM ASTIN AWB IAAHS IACA Life PBSS Section members 800+ volunteer actuaries Council and committees meet twice a year Sections host colloquia International Congress of Actuaries every 4 years conference calls annually Constituted in Switzerland based in Canada 11 staff *FMAs: Full Member Associations; AMAs: Associate Member Associations Exists to encourage the development of a global profession Acknowledged as technically competent and professionally reliable To ensure the public interest is served

5 Map of the IAA in

6 IAA Organizational Chart 6

7 Vision 7 The actuarial profession is: Recognized worldwide as a major player in the decision-making process within the financial services industry in the area of social protection and in the management of risk Contributing to the well-being of society as a whole.

8 Mission To represent the actuarial profession and promote its role, reputation and recognition in the international domain To promote professionalism, develop education standards and encourage research, with the active involvement of its member associations and Sections, in order to address changing needs 8

9 Strategic Plan - Six strategic objectives 9 1. Relationships with key supranational audiences 2. Expansion of scientific knowledge to wider fields to enhance the scope, quality, and availability of actuarial services 3. Establish, maintain and promote common standards of actuarial education and principles of professional conduct for actuarial practice, promote development and issuance of actuarial standards in jurisdictions of Full Member associations, and the global convergence of actuarial standards 4. Support the development, organization, and promotion of the actuarial profession 5. Provide a forum for discussion 6. Improve recognition of the actuarial profession (branding)

10 Principle of Subsidiarity Article 8 Co-operation The IAA: Restricts its activities to strategies and programmes which require international coordination or direction Only becomes involved with actions at level of the member associations or regional groups of actuarial associations at the express invitation of such an association or group 10

11 11 Pensions and Employee Benefits Committee Chair: Yas Fujii (Japan) Co-vice-chairs: Jason Malone (Canada), Philip Shier (Ireland) 40 delegate members + 32 interested actuaries Subcommittees Pensions and Benefits Accounting Subcommittee OECD-Subcommittee Activities includes coordinating input to supranational organizations (eg. OECD).

12

13 13 RETIREMENT PROVISION I PUBLIC II OCCUPATIONAL III INDIVIDUAL National Pension (Basic Pension) Employees Pension Insurance Qualified DB Pension Qualified DC Pension (company type) DB Lump-Sum Allowance Employees Pension Fund.. Savings (NISA) House Annuity Insurance Qualified DC Pension (individual type) National Pension Fund Family Support.. RESIDENTS IN JAPAN YF s View & Summary

14 14-20% 20% - 40% Three generations 13.2%% Parent(s) and Unmarried child(ren) 20.1% Other 10.7% Households including 65+ old 2,357K Single 25.3% Married couple only 30.7% 40% - 60% 60% - 80% 80% - 100% Households receiving public pension Public pension s share in total net income is 100% Source: Ministry of HLW of Japan Translation: YF 2014 random sample survey

15 15 Income sources of the aged (two or more person households) 2015 random sample survey (Multiple choices up to 3 items) Work Public pension Pension (occupational, individual), insurance Withdrawals of financial assets Interest, dividends house rent, land rent Family support Public support Others Source: The Central Council for Financial Services Information, Bank of Japan Translation: YF

16 16 Financial assets of household in average by age group Million JPY random sample survey Trillion JPN Assets in average Loans in average Total (65-) Source: Ministry of HLW of Japan Translation: YF

17 17 Public Big expenditure Essential social system of welfare Demographic trend is the main driver Longevity Low fertility Baby boomers YF s View & Summary

18 18 Public cont d Pension has become more manageable, but less generous Macroeconomic slide formula will reduce pension payout levels as the size of the working-age population falls and people s average life expectancy increases, within the increase of price and wage indexation will not activated while prices and wages are falling introduced in 2004, actually kicked in for the first time in 2015 Medical Care & Senior Care are becoming more problematic Both financial & human resources YF s View & Summary

19 Trillion JPY Expenditure Trend of Social Security in Japan (Budget) 10K JPY 19 National Income A Total Expenditure B (Breakdwn) Pension Medical Care Senior Care & others Pension Social Security Expenditure per capita (right-hand scale) Medical Care Senior Care & Others Source: Ministry of HLW of Japan Translation: YF

20 Forecast on Expenditure of Social Security in Japan 20 Trillion JPY Current program Reformed program Others Child Senior Care Medical Care Pension Source: Ministry of HLW of Japan Translation: YF

21 Forecast of Japan s population by age 21 (actual) (actual) Total population Total population Total population Total population 123,610k 128,060k 120,660k 86,740k Baby boomers Baby boomer juniors Source: Ministry of HLW of Japan Translation: YF

22 22 Occupational Optional on introduction and benefit formula & level, but legally protected once introduced Importance increasing Unfavorable trends Low interest rate Longevity High volatility of the financial market Popular discussion on the role of occupational systems comparing with social security and individual preparations A range of employer s responsibility To concentrate more on Core than fringe Impact of IFRS or JGAAP s convergence with IFRS YF s View & Summary

23 23 Occupational cont d Monster DBs are rarer (compared with the US, the UK, the Netherlands) Changing benefit type, but keeping each company s high level framework of benefits Benefit types and risk management Final salary related benefit used to be common Accumulated Point system: popular since 1980s Cash balance plan: popular since 2002 DC: getting popular since 2001 LDI: less popular DB Lump-Sum Allowance (largely unfunded): the most traditional (since 1700s) and survives YF s View & Summary

24 24 Qualified Pension Assets in Japan Trillion JPY TQPP DC (corporate type) EPF DBCPP Source: Resona bank Translation: YF

25 25 Trillion JPY Qualified Pension Assets in Japan cont d TQPP DBCPP PFA EPF Source: Pension Fund Association Translation: YF

26 26 Average Asset Allocation of Qualified DB plans General account of insurance company Cash equivalent Others Foreign equities Foreign bonds Domestic equities Domestic bonds Source: Pension Fund Association Translation: YF

27 27 PBO (or DBO) Yes No Total Companies Companies PBO / Common Equity Companies US Japan UK Canada Europe (ex UK) France Germany Italy Switzerland Spain Sweden Netherlands Finland Denmark Belgium Greece Norway Portugal Austria Ireland Hong Kong Singapore Australia New Zeeland PBO of MSCI Companies YF (2009), Pension and Economy September 2009, Research Institute for Policies on Pensions and Aging Data: March 2009 Translation: YF

28 Accumulated Points 28 TOYOTA DB Lump-Sum Allowance Company Post Employment Benefit DC Cash Balance Toyota Pension Fund Since October 2005 Source: Website of TOYOTA Translation: YF

29 SONY Pension Fund Company 29 SONY Existing Employees (entry before 31 May 2012) DB Lump-sum Allowance New Employees (entry After 1 April 2012) DB Lump-sum Allowance <Annuity 1> Life time <Annuity 2> Limited term DC (Cash or Deferred) Longevity effect DC (Cash or Deferred) Plan Amendment Source: Website of SONY Translation: YF

30 30 Existence and types of Post-employment Benefits Survey of 2013 Target Companies 6,144, Valid Responses 4,211 % Size of company (Employee #) Total Post-employment Benefits exist * Lump-Sum Allowance Only Qualified Plan Only Both Not exist Total 1, * ( ) shows a percentage among companies of Post-employment Benefits exist Source: Ministry of HLW of Japan Translation: YF

31 31 Why DB Lump-Sum Allowance survives? Cash at retirement is an important tool on expressing gratitude for long dedicated service (not paid to a bad-boy!) To involve core employees to share management To keep away from volatility of the money market To avoid double capitalization To concentrate on more service period than retired life Easier administration Easier supervision or regulation by the government Tax treatment of qualified plans is not necessarily attractive enough Supported by the faithful and comprehensible financial report of the employer YF s View & Summary

32 Recent Law/regulation changes To promote qualified pensions 32 DC (the Diet passed at May 24, 2016) To enhance eligibility of DC (individual type) to government employee; low or no income spouse of employee; and employee covered by other qualified pension plan(s) To allow SME employer to make contributions to DC (individual type) DB (public consultation May 27 June 26, 2016) To allow more flexible contributions (counter-cyclical) To allow more DC-like plan design Tax exemption (the upper house ordered the Govern t to examine) Current : E-T(temporarily stopped since 1999) -T(preferential deduction) From 2017: E-E-T(the same preferential deduction?) YF s View & Summary

33 Recent Law/regulation changes cont d 33 To promote individual savings NISA (Nippon Individual Savings Account) Introduced in 2014 Tax exemption of investment return: T-E-E Annual limit of new money raised up to 1.2M JPY (11K USD) in 2016 from 1M JPY YF s View & Summary

34 THANK YOU! Moving the profession forward internationally