At the 17th ISSA International Conference of Social Security Actuaries and Statisticians, which took place in Berlin, Germany, from 30 May to 1 June, over 220 specialists and social security managers discussed the role that actuaries play in ensuring the long-term sustainability of social security systems.
The conference participants, who came from over 70 countries, also discussed the role of social security in reducing poverty in old age, the sustainability of health-care systems, the increasing importance of actuarial reporting and the impact of economic conditions on social security.
Welcoming the delegates, Hartmann Kleiner, Chairman of the Board of the German Federal Pension Insurance that hosted the event, noted that the crisis has reconfirmed the essential role of social security in society, and has strengthened the recognition of the expertise and independence of actuaries.
In his address to the conference, ISSA President Errol Frank Stoové emphasized the crucial importance of actuaries for the sustainability of social security schemes, and underlined the priority that the ISSA is giving to supporting the development of actuarial and statistical activities.
Mr Herbert Rische, President of the German Federal Pension Insurance, outlined the impact of the economic crisis on the German social security system. He stated that “social security has shown itself a robust and reliable actor during the crisis” but that a number of reforms were needed to ensure future sustainability of schemes, and he called for social security institutions to work with other stakeholders to ensure that appropriate and adequate benefits are provided to the population.
Eliminating poverty in old age: is social security the answer?
Questions of adequacy of benefits and their financing were addressed in the conference’s first session. Country examples highlighted social security’s key role in reducing poverty in old age but increasing efforts to ensure benefits reach vulnerable groups such as the informal sector and the self-employed are still required, participants concluded.
During discussion, it was recognized that there are various factors that contribute to the adequacy of benefits, and that both the stability and predictability of benefits are important for pensioners. Social policies should be more closely coordinated, the ISSA Secretary General, Hans-Horst Konkolewsky stated, and he called for more integrated approaches to providing benefits and services in old age, to ensure that the provision of old-age benefits is consistent with employment policies for elderly workers and approaches to managing disability cases in the workforce.
Impact of economic conditions on social security schemes
In order for social security to be able to respond to difficult economic conditions, it must be dynamic and reflect the external environment in which it operates, according to Mr Bert Rürup, former Chairman of the German Council of Economic Experts. He noted that pension reform is “a value judgement on distribution and intergenerational equity,” and that mixed, multi-pillar approaches to proving benefits are needed, although “each country will have its own view on the importance and design of each pillar”. The role of actuaries is to highlight options in the trade-off between adequacy, equity and sustainability, he said.
More public scrutiny of actuarial reporting
The trend to increasing accountability of actuaries in their choice of assumptions, reporting and recommendations was highlighted. A survey on actuarial and financial reporting for social security schemes presented during the conference, and jointly developed by the Office of the Chief Actuary (Canada) and the ISSA Technical Commission on Statistical, Actuarial and Financial Studies, confirmed the growing importance of such reporting.
Financial sustainability of health-care systems
Case studies on China and Japan presented at the event illustrated the trend towards increasing health-care costs in many countries, and identified possible approaches to ensure that costs are contained while social security coverage is extended. It was recognized that efforts will be increasingly required on both the demand and supply side if universal and quality medical services are to be provided in the future at acceptable cost.
As Mark Pearson, Head of the Health Division at the OECD commented, money spent on prevention measures is often better value than pure health spending but there is currently significant underspending in this important area.
Actuaries as key players for sustainable social security
In his closing remarks, ISSA Secretary-General Hans-Horst Konkolewsky noted that social security has proved robust but must continue to be dynamic, and he called for the essential contribution of actuaries to the building of a social security culture.