DHI teams up with the Institute and Faculty of Actuaries

Press release from the David Hume Institute

15th February 2022

Image credit: Photo taken by Ross Sneddon free on Unsplash 15.02.2022

The David Hume Institute and the Institute and Faculty of Actuaries are teaming up to learn more about how people in Scotland are managing financial risks.

We are pleased to announce a new partnership with the Institute and Faculty of Actuaries (IFoA) exploring the ways in which people think about and manage financial risks and the practical measures that might help them.

The IFoA has been campaigning since early 2020 on what it calls ‘the Great Risk Transfer’ which is the trend to transfer risks from institutions – such as employers, the state and financial services providers – to individuals who are often not well equipped to handle those risks.

Drawing on examples already explored with IFoA stakeholders, including changes in pension provision and access to affordable insurance, we are working with groups and individuals to better understand their perceptions of the risks they face. We also want to find out what helps people when they make decisions and take practical steps to mitigate risks.

Nicholas Chadha from the IFoA Scottish Board said:

 “We think there are opportunities to ease the burden for consumers, who are not often well-equipped to manage complex risks by shifting prime responsibility for certain risks back towards institutions. New products and services are also necessary to help consumers to make informed decisions which lead to better outcomes for themselves and for wider society. 

 Our recommendations focus specifically on pensions and insurance, in which actuaries’ skills and experience enable them to contribute to solutions. They include the development of Collective Defined Contribution schemes, investment pathways for drawing down pension pots, and defining a minimum level of insurance protection needed by all.

 Working in partnership with the David Hume Institute will help us further develop our thinking and our policy recommendations in this area.”

 Susan Murray, Director of the David Hume Institute said:

 “The Great Risk Transfer reflected much of what we heard from individuals during our previous research on The Action Project. We heard from households that the ability to plan for the future is severely compromised by the pressures of everyday financial challenges. 

 This partnership allows us to explore the implications of that for the IFoA’s policy recommendations as well as enabling us to reach out to a diverse range of people. Our work will focus on finding out what people consider to be the most important areas of financial risk for them, the ways in which they have addressed or plan to address them, and what barriers they might face.”

Insights from the research will be published later this year.