"Who doesn't want to predict the future?"

Published on: 29 July 2020

Who are the people answering your telephone call when you have a question about pensions? And who are the people ensuring that you receive your pension statement every year? What are the underlying factors in making sure there is enough money later on for your pension payment? We take you with us to have a look behind the scenes.

Caroline Bruls (30) is an actuary, or the fortune teller of the pension fund.


What is it an actuary actually does?

“As insurance mathematicians, my colleagues and I are responsible for, among other things, the payments a pension fund has to make. Part of our job is to calculate the contribution needed for next year. We take a look at how many people are accruing pension for instance. And we examine how many people are retiring, how much pension they will receive and whether they have partners as potential survivors. We compare the outcomes of these investigations with the amount of money available in the fund. That results in the coverage ratio. As long as that coverage ratio is at least one hundred percent, a pension fund is able to continue paying the pensions until the distant future.”


Has it always been your dream to become an actuary?

“No, it sort of just happened. I didn’t even know what it was exactly at first. I just bumped into the position during a two-years starters’ action plan at APG. I immediately enjoyed it. In the meantime, I have been doing this job for five years now. Prior to this, I studied. First economics, later on econometrics. After that, I followed a post-graduate education to become an actuary.”


What are your main tasks?

“We develop mathematical models for future payments. We do so based on assumptions regarding the risks for the pension fund. What is the life expectancy of people in general, does he or she have a partner and are there any young children? We furthermore use statistics to assess the chance of dying and incapacity to work. And we also check afterwards whether our assumptions were correct.”


Isn’t that boring?

“No, on the contrary. We try to predict the future in an ever-changing world, and who doesn’t want to do that? People may think we are still struggling with papers and a calculator. But because of the technological progress and the availability of increasingly more data, we are able to make faster and more advanced calculation models. This means we are able to conduct much more extensive risk analyses and provide our clients with more insight. But you do have to love working with figures if you are an actuary.”


And you love figures?

“I really enjoy calculating, inventing solutions and transferring information. And the fact that we provide pension funds with direct information, enabling them to determine their policy.”


Does the participant have any awareness of the work you do as an actuary?

“We calculate the amount of the pension contribution. And we calculate the coverage ratio. This latter indicates whether there is space for indexation, or that pensions have to be reduced and to what extent. A possible reduction and the maximum compensation for inflation is dominated by statutory rules by the way.”


How far ahead do you look into the future?

“Pension funds have to guarantee lifelong payments. Also when people reach the age of one hundred years or more. That is why we are trying to look into the future for up to one hundred years ahead.”


How do you know how old participants will become?

“We use the prediction of the average life expectancy provided by the Dutch professional association of actuaries and data of the Dutch Central Statistical Office. A Dutch person retiring now, still has about twenty years to go. But we adjust that information specifically to every pension fund based on data in our own administration. The officials of ABP, for example, appear to live approximately three years longer than the national average after they retire. Construction workers at BpfBOUW equal the average figures.”


Do you also calculate the individual pension payments?

“No, but we do calculate the basis for the independent payments. We use a computer system to calculate the individual pensions.”


What is the biggest challenge in your work?

“To predict the distant future, using a lot of mathematics and statistics. And to then explain the outcomes to the management of a pension fund. The same applies to the impact on the coverage ratio and the pension contribution when a management team is looking to change its policy. Or when employers and employees want to change a pension scheme.

What I enjoy the most is being able to transfer that information properly. If they are able to make their decisions using our data. It also pleases me when I see the face of colleagues light up and they say: Now I get it.”