The Profession claims to make financial sense of the future, and our particular angle is our purported ability to see past the whims of the short termists and keep an unwavering eye on the long term. The pensions arena has been no different … until now?

In June 2003, the Government converted defined retirement benefits unambiguously from an arguably vague promise to a debt, behind which the sponsor has to stand. A series of subsequent legislative changes, including the introduction of Scheme Specific Funding and of the Pension Protection Fund (PPF), with its proposed risk-based levies, has forced trustees to take a more commercial view to make sure that accrued benefits are met.

This stands in contrast to the gentler ‘funding’ environment in which pension schemes and Scheme Actuaries had become used to working. In that environment, the actuarial ‘long term’ justified many of the decisions taken in funding schemes — the long-term focus drove investment strategy and the approach to setting or agreeing contribution rates.

Has the rationale for the ‘long term’ disappeared: now that some of the discussion about funding has included talk of deficit correction periods of less than five years; now that accounting standards put any investment and actuarial volatility in the pension scheme into the sponsor's accounts every year; and now that PPF levies will change from year to year as funding levels and sponsor covenants change?

Has the Actuarial Profession over-reacted in focusing on the short term, or has it under-reacted? Will investment strategies look very different in years to come? Will valuations and funding advice take on a different shape?