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  #21  
Old 07-16-2018, 01:59 PM
Dr T Non-Fan Dr T Non-Fan is offline
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Quote:
Originally Posted by campbell View Post
pulling stuff together from the threads:
http://stump.marypat.org/article/103...arial-memorial
Thank you for that. Makes for good reading on the subject.
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  #22  
Old 07-17-2018, 05:36 AM
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Several years ago, Jeremy sort of enlisted me to be the property/casualty voice for one of his many causes. I had the pleasure of several very interesting phone calls with him. He was a charming, intelligent, and kind man, and very passionate about his causes.
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  #23  
Old 07-17-2018, 10:01 AM
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http://www.pionline.com/article/2018...ary-dead-at-75

Quote:
Jeremy Gold, longtime pension actuary, dead at 75
Spoiler:
Jeremy Gold, a longtime pension actuary and proprietor of Jeremy Gold Pensions since 1989, has died.

Mr. Gold's son, Jon Gold, said he died on July 6.

The elder Mr. Gold, 75, had been battling leukemia, his son said. He was an alumnus of the Wharton School of the University of Pennsylvania, where he received a Ph.D. in pension finance in 2000.

RELATED COVERAGE
Ford's lump-sum offer is a first for U.S.Pioneer U.S. Steel joins corporate wave
Jeremy Gold was a fellow of the Society of Actuaries and a member of its board of directors from 2006 to 2009.

There will be no memorial service, as Jeremy Gold had a living wake in December. Jon Gold is encouraging people to register for the National Marrow Donor Program in remembrance.
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  #24  
Old 07-17-2018, 10:33 AM
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https://www.forbes.com/sites/ebauer/.../#68b838c3643f

Quote:
Public Pension Funding Crisis: Who Was Jeremy Gold And Why Should You Care?
Spoiler:
The bottom line: public pension plans' poor funding levels would be even worse if they were accounted for the way that private pension plans are, the fact that their accounting methods differ has contributed to the funding crisis, and Jeremy Gold was either a prophetic or foolish in attempting to call attention to this fact.

Let's start with more actuary-splaining:

Actuarial valuations . . . in the corporate world


In the corporate pension world, there are two types of actuarial valuations: accounting valuations and funding valuations. The former determine what liabilities and expense are recorded on the company's books, and the latter determine what contributions the employer will make to the pension fund, or define a range of choices.

The interest rate -- or, in actuarial terminology, the discount rate (since you're discounting to the present, the present value of a future benefit) -- for accounting valuations is pretty nearly the corporate bond rate; once upon a time, it was just a generic bond rate; then more attention was paid to ensuring that the duration of the bond rate is equivalent to the duration of the plan liabilities (that is, simply defined, that the weighted average of the future payouts of the bond index match the future payouts of the pension plan); now most companies use a yield curve to determine the discount rate.

MORE FROM FORBES
The consequence of this is that liabilities can increase substantially in periods when corporate bond rates are low in a given country. Incidental fun facts: internationally this can be a bit tricky. What do you do about countries where there are very few long-dated corporate bonds? Sometimes you use government bonds instead, and sometimes you can add a bit of an adjustment to represent what you think the discount rate would look like if there were enough corporate bonds. What about a country where there are no long-dated government bonds? To be honest, my colleagues and I never really had a good answer, but just made some reasonable estimates and tried to persuade the client that they weren't material.

But I always preferred to go back to the original text of FAS 87, the first FASB statement on pension accounting, which says that

Assumed discount rates shall reflect the rates at which the pension benefits could be effectively settled.

that is, the rate at which an employer could purchase an annuity from an insurance company for the benefit. And that's always felt right to me. If you have to assign a value to a piece of property, you base it on how much you could sell it for in the market. If you have to value a liability, it makes sense to assess its value in the market, by how much it would cost to "exchange" that debt, in this case, by purchasing annuities. Conveniently, group annuity rates are more or less the same as corporate bond rates, so that the corporate bond rate has become the norm.

Pension funding? That's a bit different. In the United States, there used to be a fair bit of flexibility in funding, with a defined minimum and maximum funding level, the former to ensure adequacy and the latter to ensure that employers didn't take advantage of the ability to avoid taxes by making (tax-deductible) contributions to their pension funds. In this idealized world employers would fund their plans more generously in good years, less so in lean years. And because the expectation was that employers were setting their annual contributions with the full understanding that, as a business, they were taking risks, and that they'd have to make up any shortfall in the future, they were allowed to use an interest rate that matched their expected return on assets. But that's in the past -- the Pension Protection Act of 2006 prescribes specific rates that must be used in funding valuations, based on government bond rates, so the "choose your interest rate" is really more of an idealized approach, or what a church plan (exempt from funding requirements) might do.

. . . and in states and municipalities

But the rules are different for government pension plans.

There are, of course, no federal government rules for how much states and cities must fund their pensions -- states might instead define some funding target ("100% funding target . . . in 50 years") and pledge to contribute the required amount each year; and those states may or may not actually do what they say they're going to do, and the method of calculating the contributions needed to get to that funding target may be more or less fanciful depending on who's deciding the assumptions.

But even government financial accounting rules are different, as defined in GASB 67. A plan that's unfunded, and that never has any intention of being funded, is valued based on

A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher

that is, not much different than a corporate pension plan.

But a plan that is funded, and whose actuaries determine that the combination of funds already in the plan, as well as contributions scheduled to be made by the state or local government in the future (whether or not they're actually made is another story), are enough to pay out benefits in the future, has different rules, using

the long-term expected rate of return on pension plan investments that are expected to be used to finance the payment of benefits.

And if a plan is partially funded, they use a weighted average of the two rates.

Which leads to some peculiar outcomes, such as that reported at Wirepoints, in which the pension plan for the city of Chicago almost-magically is in a better financial position this year than last, not because of an increase in contributions or a decrease in benefits owed, but because the city council's most recent budget includes a new schedule of contributions which intends, by means of increases each year in the future -- which may or may not actually happen -- to arrive at a funding level sufficient to shed the lower discount rate requirement.

Does this sort of manipulation sound any more reasonable to you than it does to me?

The more you think about it, the more bizarre it becomes, that the valuation of a future debt should depend on how aggressive you are in your plan to save up to pay for that debt.

Understated liabilities have consequences.

In the corporate world, asset return-based funding discount rates had been allowed with the expectation that companies could catch up out of future profits, if necessary, and that they didn't have any particular obligation one way or the other, as long as their accounting is correct and disclosed to shareholders, regulators, and the financial community, to have greater or lesser levels of debt. But when a corporation goes out of business, it can no longer make up the difference between its pension fund and the cost of annuity purchases, and the federal government is left holding the hat.

But when a government body uses the GASB-defined asset return rates, it creates all manner of potential for misgovernment, using the device of assuming higher asset returns (either simply by declaring it so, or by investing in riskier assets) to create artificial reductions in liability and as a means of justifying inappropriately low contributions. It makes pensions seem cheap compared to actually giving employees wage increases in the here-and-now, and (see my earlier actuary-splainer) enables lawmakers to effectively borrow money to pay wages, asking the next generation to pay for the wages of this year's teachers and toll-takers and other state workers. And it means that when, as in the case of Detroit, the municipality is no longer, in corporate-speak, a "going concern," the money's not there.

What would Illinois' 40% funding rate look like if the state were obliged to use the same accounting regulations as corporations? It wouldn't be pretty - but it would be honest.

And Jeremy Gold?

That's where, finally, Jeremy Gold comes in. New reports that he passed away on July 6th may not have made their way much outside the actuarial world, but Gold was an actuary who watched the pension fund raids of the 1980s and then embarked on a mission, iconclastically warning for more than 25 years about the risks of pension underfunding caused by too-lax funding and accounting methods. In a Forbes article in 2015, "Where Are The Screaming Actuaries?", he took actuaries, or specifically, the actuarial profession to task for not ensuring that professional standards required actuaries to provide more appropriate values:

The actuarial profession acknowledges, but does not fulfill, its duty to the public. . . .

The public will get the best estimates only when the Actuarial Standards Board requires the actuaries, who do have the data, to produce economically pertinent and decision useful numbers.

a refrain he elaborates on in an article at ConcernedActuaries.com. Yes, actuaries follow accounting standards and the requested scope of work by the governments engaging them, but Gold's message is that actuaries have a professional duty, and a duty to the public, to disclose "true" liabilities whether or not the accounting standards or the legislature calls for it. If you're even more interested, Mary Pat Campbell has even more information on the man and his life's work at her blog.

So what will Gold's legacy be?
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  #25  
Old 07-25-2018, 12:49 PM
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https://www.soa.org/about/obituaries...deceased-gold/

Quote:
In Memory of Dr. Jeremy Gold
Spoiler:
By Evan Inglis

Dr. Jeremy Gold, FSA, CERA, MAAA, Ph.D., an influential pension actuary and former SOA Board member, passed away peacefully in his sleep on July 6, 2018.

Gold had a profound impact on the pension actuarial profession. He and a few actuarial colleagues engaged the profession about how traditional actuarial methods conflicted with financial economics principles in the early 2000’s. Gold spoke and wrote extensively for actuaries, economists and the general public on pension risk, pension investments, and liability measurement. His 2003 seminal paper, “Reinventing Pension Actuarial Science”, co-authored with Larry Bader, developed an understanding of modern corporate finance’s view of costs and risks of corporate pension plans. He co-authored, with Richard Bookstaber, one of the earliest papers on what is now called “liability-driven investing” (LDI) for pensions in the 1980s “ In Search of the Liability Asset”, Financial Analysts Journal, 1988. He was quoted often in the press, especially with regard to pension plans sponsored by state and local governments where proper liability measurement became a contentious issue. His quest to advance actuarial practice continued until he ran out of energy due to illness in mid-2017.

Within the profession, Gold was sometimes a controversial figure to those reluctant to modify practice along the lines that Jeremy and others proposed. However, even those who disagreed with Gold’s perspective respected his energy, his desire to advance actuarial practice and his thorough grasp of financial economics. I along with hundreds of my actuarial colleagues became smarter about the work we do through our interactions with him. Many pension actuaries experienced in-depth discussions or disagreements with Gold, who would call on his seemingly limitless reservoir of knowledge about finance, investments and markets to make his points.

Gold worked at both life insurance and pension consulting firms, eventually landing at Buck Consultants as an Account Executive and Consulting Actuary. He left Buck in the mid-1980’s when he moved on to work at Morgan Stanley and broaden his professional perspective to include both assets and liabilities. He worked at Morgan Stanley for four years before leaving to create his own practice. He received a Ph.D in Pension Finance from the Wharton School at the University of Pennsylvania in 2000. The learning and thinking that Gold did at Wharton became the foundation for the perspective that he passed on to the profession for the rest of his life.

Gold served as a Society of Actuaries Board member (2006-2009) and Vice President (2011-2013). He won the SOA’s Redington Prize for best investment research paper by an actuary twice – once for “Reinventing Pension Actuarial Science”, and again for “The Intersection of Pensions and Enterprise Risk Management” in 2008 . He testified for Congress, the FASB, the GASB and for the ERISA Advisory Council. He cofounded and chaired the Financial Economics Task Force (later renamed the Pension Finance Task Force) and was Vice Chair of the American Academy of Actuaries Pension Practice Council.

Gold became aware that he had a limited time to live due to MDS -- a rare form of cancer, in 2016 and accepted his fate somewhat matter-of-factly. In 2017, when he informed friends and professional colleagues about his fate, he joked that “I’m either still in denial or I went straight to acceptance”. He was referring to the five stages of grief and his lack of any grieving. His sense of humor helped people discuss his situation with him without feeling awkward. Late in 2017, his energy already depleted by his illness, Gold brought together more than a hundred family members, friends and professional colleagues for a “toast/roast” in New York. His lifelong gang of friends “the LESBAR (Lower East Side Boys Annual Reunion)” joined family members, academics and actuaries. People shared stories, poked good-natured fun at Gold and celebrated a full personal and professional life.

For the actuarial profession, Gold leaves a legacy of change based on challenging accepted norms and continual learning and teaching. He will be missed but his accomplishments and influence will live on in the practice of the many actuaries who benefited from knowing him.
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  #26  
Old 07-25-2018, 01:13 PM
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"actuary-splaining" -- I like it!
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  #27  
Old 07-27-2018, 12:29 PM
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https://burypensions.wordpress.com/2...d-in-memoriam/

Quote:
Jeremy Gold In Memoriam
Spoiler:
Jeremy Gold’s obituary in P&I mentioned that there was no memorial service but rather a living wake last December. In that spirit ….


In the Spring of 2014 the Hough Graduate School of Business held a roundtable discussion on a paper titled “RETIREMENT: A STATE OF MIND OR AN OBLIGATION OF THE STATE? A Tale of Broken Promises, Funding Shortfalls and Long-term Insolvency” at which Jeremy Gold told his truths:
[video]
At around this time Jeremy Gold also commented on this blog:

Jeremy Gold commented on Complaining About Public Plan Actuaries

“This session is not being recorded but you may be quoted in John Bury’s blog” Lance Weiss kicking off Session 704 – Public …
Quote:
Originally Posted by Jeremy Gold
“With public plan actuaries even a lawsuit is inadequate in that you would be suing within the state or jurisdiction that likely encouraged/benefited from the perceived malfeasance.”

I have been involved in virtually every large public plan suit against actuaries in this century.

A number of these cases end up in federal court despite seeming to be a local matter.

Those in state court often involve the state and/or the plan suing the actuaries. If anything, the vested interests of the plaintiffs and the judges is served by large awards or settlements. I am not saying the judges are biased. In my experience they are fair. I am saying that John’s supposition that I quoted above is incorrect.

The suits do not ask for a rollback of benefits. They ask for the actuaries to make good on the shortfall.

Although I have served both plaintiffs and defendants, one thing is very clear to me: actuarial defendants always lose. This explains why the biggest actuarial firms have abandoned the business to GRS and Segal, in some cases selling the business to them. It also explains the addition of tort limits (typically one or two years fees) in engagement documents.
Full Hough roundtable discussion:
[video]
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  #28  
Old 08-24-2018, 11:06 AM
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He will be missed. (Sorry to comment so late, but I only just joined). I have followed his work for a long time.
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