I have just finished reading the notes and looked at past papers and I am still unsure about when is it ok to use certain terms? For example, if I was writing to the trustees of a pension scheme, can I use terms such as assets, liabilities, funding level, scheme deficit? What would be the best approach to decide how much I need to dumb-down the correspondence? Any advice would be much appreciated
Trustees should be reasonably knowledgeable. If you do feel uncertain whether to use jargon, try defining it within your answer if you cannot think of a laypersons equivalent. Unfortunately I don't think there are any hard and fast rules.
I agree that there are no hard & fast rules. One of the tests of CA3 is being able to judge whether the recipient/audience will understand particular language/terminology. If in doubt, as bystander says, you should explain the concept and then associate that with the terminology being used (i.e. define it). In CA3 it is generally best to err on the side of caution. For example, one of the trustees may be a new member trustee with limited experience of the operation of pension schemes. You should form your communication so it will be understood by that least-knowledgeable member of the audience, whilst not coming across as condescending to the remainder of the audience. Of course, for all CA3 questions you can assume that the recipient/audience has "some business knowledge", as this is stated in the CA3 syllabus. However, you do still need to consider each situation separately - looking at the particular situation described in the question concerned. No hard & fast rules! So personally, I think that "asset" will be understood by any individual with "some business knowledge". "Liability" will be understood perhaps at a very general level, but not necessarily what that means for a pension scheme - i.e. the specific liabilities of such a scheme. "Funding level" and "scheme deficit" I would be much more cautious with (would you have understood these before studying to be an actuary?!) and aim to either avoid or to explain before being used.
Thanks for the reply and it seems perfectly reasonable. However, I was looking at one of the assignments (the one where you have to prepare a presentation for a trustees' meeting). The original question doesnt include any discussion about assets, liabilities or funding position/level. But the ActEd solutions have slides referring to all these actuarial concepts without any real explanations of the terms. This seems slightly contradictory to what was mentioned in the previous thread where it was suggested that you should explain these terms
Yes - I think you are looking at X2.2. In this case, the objective of the presentation is to explain stochastic modelling - not educate the trustees about the specifics of the scheme's liabilities. We have judged that a high-level understanding of the term 'liabilities' is all that is required to achieve the objectives of this particular communication. So no detailed definition has been provided. Funding position is described using an example in the third slide of the deck. However, I agree that we could improve the solution by including more explanation of this term in the narrative. Our solutions are intended to be sample passing solutions that could realistically be produced under exam conditions. They are certainly not perfect solutions! I could update the narrative in our solution, but I feel nervous about turning our answers into polished/perfect solutions. I'm more comfortable pitching them at a benchmark which is a 'passing solution that could realistically be produced under exam conditions'. However, in the light of your observation, in the next edition of our solutions I'll include a comment about how the sample solution could be improved in this respect. Thank you for comments and prompting me to make this improvement to our assignment solutions .
