CA3 Past Paper March 2016

Hi
Was attempting the past paper for March 16 on the website
https://www.actuaries.org.uk/sites/...ent/IandF_CA3_2016_Paper2_TrusteeTraining.pdf
I was completely stumped by this as
1) I have never worked on Annuities
2) I didn't have any clue as to how you can form 3 simple rules for purchasing annuity policies based on the limited information provided.

Isnt the CA3 communication paper trying to test our communication skills and not look to test your knowledge of a product line
I have never worked in Annuities and I did find this very difficult
Tutors and fellow students ?
Thoughts?

 

3 simple rules based on a certain set of annuity rates was very challenging for me!!
The filtering process for the data and making slides and finalsiing the presentaiton speech was way too much for me ((((
Am not sure how intuitive this question was for most students
I think this was massively skewed towards people who have had annuity experience.

 

So would it be possible to pass the question if you got the simple rules wrong but communicated effectively?

 

Such an unfair paper! Most of us probably have never worked in this area, which makes it that much worse when we have to come up with strange rules (something we're not used to at all) in addition to doing the usual things required for this communications exam. I can't believe they didn't at least guide us to the other rules or provide hints. So much of my time was spent trying to formulate rules rather than worrying about how to communicate things on this, go figure, communications exam!!! How nerve-grating to say the very least... I was so rushed that I linked my PowerPoint graphs to Excel because of the way I pasted the graphs to PowerPoint, and so the second graph ended up changing (against my intentions of course) to be the exact same as the third one (and I didn't notice at all obviously). All this rushing also meant that even though I recognised the 60:40 ratio between the escalating annuity and the level one, I stupidly said that the one was 25% greater rather than 50% greater - I can only hope that because I apologised in my oral and tried to explain what the second graph SHOULD look like and mentioned how I had only "just noticed it but would be glad to provide anyone with a corrected verision if you would kindly let me know", I will be somewhat excused. As for the embarrassing 25% -instead- of - 50% error, I just hope that they see past that and that it doesn't mean I can't communicate - really frustrating experience. Honestly I fail to understand how this is passed as an acceptable question for this kind of exam. Surely there is a bunch of people it would have go through to get finalised and just SURELY someone would have spotted this issue!

 

@ccc84- I totally agree with you.I spent a whole lot of time in trying to figure out what were the 3 rules they were after!!I think this was a really unfair paper
@Bidza-I don't think so...You cant have totally ludicrous rules and they just focus on the communication part.
VERY Very frustrating
Tutors , I think this should be bought to the attention of the Institute.
This wasn't a fair paper!!

 

I sat this paper and am awaiting results. I agree with all comments above - this is a very unfair question for those with no knowledge of annuities. Unfortunately this is a running theme in recent CA3 presentations: there seems to be more focus on understanding technical content than preparing an effective piece of communication. I get the feeling this is where a lot of candidates spend most of their time in the exam. If you get the technical side wrong you have no chance of passing, no matter how good your communciation skills are.

Personally, I found it difficult in the time allowed to do the data analysis, formulate rules and prepare the necessary charts before I could start writing the slides. My own rules were extremely simple, almost to the point of being embarressing to explain in the presentation. I am hoping that they are "good enough" and the examiners actually focus on my explanation/communication of them.

I have some sympathy with the examiners as I understand they need to pick a sufficiently technical subject in order to test a candidate's ability to communicate. However, why not strictly limit this to material from the CT exams which all candidates should be familiar with? There have been some ridiculously complicated papers on pension topics in the recent past.

 

Hey ca3_ache..all the best for results.
Can I check with you what 3 simple rules you could think of , based on the data provided.
Cheers

 

Hi Vikky, I will send you a PM.

 

Lol, I was also ultimately embarrassed! I mean, my final simple rule was honestly just ridiculous I think. But that's all I could come up with in the last 5 minutes. So I think I possibly had that problem in addition to actually formulating a decent second rule, but illustrating it incorrectly because of the time pressure!

I'm not sure I can sympathise with the examiners though. The fact is, we've all been tested on technical stuff - that's precisely what the CTs were for. Why not rather provide us with the "answers" in technical terms, using whatever jargon you want to use, and get us to simply transfer this into communicable language? I mean, is this NOT a communications exam?

Anyway, what's done is done - I somehow have to pick myself up and keep going. I was wondering if you managed to pass in the end? And like vikky, I was also wondering what your simple rules were?

Here's hoping they put up a solution

 

Hi ccc84
They have put up an examiners report. I just looked at the rules and it was just annuity rates.

 

Thanks Bidza - unbelievable!

Although I think I can see where I went wrong in the written paper. I doubt that it was with my ability to be clear and write coherently etc. I just didn't focus enough on justifying the investment decisions. So I guess that that, coupled with the technical errors I made in the dumb oral and slides, meant I missed out - Just gonna have to practise a bit more. I just wish I could get a November slot as it's probably not going to be on pensions!

 

Lucky for me, this was my final CA3 sitting! I don't think I've ever been more relieved to have passed an exam before. As the report is now available I don't mind sharing my own three rules publicly. These were:

1. Estimate of income at age 60 or 70: divide cash by 20 or 15 respectively.
2. Income roughly doubles if annuity deferred for 25 years. (Income twice as high at age 55 cf. age 80).
3. Option of 3% increases vs. flat pension reduces initial income by 1/3.

I suppose you can argue about how simple these actually are. Having read the examiner's report it seems the first is probably OK and the other two are too complex.

Having seen the rules the examiner's came up with I am even more incredulous about this particular exam. It was certainly not obvious from the question that this would be sufficient. If you were lucky enough, like me, to go down that route then I suspect you probably passed. Very little to do with my ability to communicate - more on deciding what to communicate. It appears I wasted quite a bit of time coming up with these rules which would have been better spent on the slides.

 

That is a very fair point. Perhaps that might be a better direction for CA3 in future. It would certainly remove the uncertainty around what messages the examiners are actually looking for.

 

Tutors?
Thoughts?
The suggested answers are on the website.

 

I am absolutely gutted after seeing the solutions for this exam. My written paper is pretty much in line with the report - I suspect the presentation was a fail due to the rules. One of my rules, which is exactly the same as suggested by David in his post, is definitely more complex than the 'annuity rate rules' in the report! I have read the question repeatedly and still don't see any clue vaguely pointing us to use annuity rates. It looks like I've failed due to my unfortunate choice of rules rather than my ability to communicate.