This article in "The Actuary" magazine summarises my 2022 entry for the IFOA Frank Redington Prize, which is my response to the question: "What would be a sustainable and effective UK pension system for the people?"

The article gives a brief – and hopefully clear - explanation of how my proposal deliver extra value over a conventional AE scheme. It also addresses a more sophisticated criticism, especially from fellow actuaries, that what I'm proposing is 'just' with-profits in disguise. It explains how the smoothed approach to AE 'keeps the good parts of with-profits and removes the bad.'

For an Internet link to more information, click here

I got a surprise email on 21 June 2023 from a UK actuary, James Sharpe, who asked if I was the Colm Fagan who was named in a recent book "Dealing in Uncertainty" by Arjen van der Heide as the author of a “landmark” 1977 paper on maturity guarantees. I confirmed that I was. James has kindly added the paper to the NOCA site. It can be accessed through the link below. Arjen van der Heide's book (which is well worth a read, by the way) has three references to my 1977 paper. The first is attached. The other two are (on page 98): "The Irish actuary Colm Fagan (Fagan, 1977) had suggested an approach to managing the risk of maturity guarantees that was very similar to the replicating portfolio logic of option pricing theory (see Chapter 4)." and page 107: “Crucial in this respect was the fact that an Irish actuary Colm Fagan had independently developed a concept for a dynamic investment strategy similar to that underpinning the Black-Scholes-Merton model. He presented his model as a generalisation of Redington’s immunization, ‘both being dynamic investment strategies designed to keep the market value of the assets and liabilities equal at all times by imposing certain constraints on the assets’ (Whelan, 2002, pp34-5)”

It was nice to be mentioned in the same sentence as two Nobel Prize winners (Scholes and Merton)!

Brian Woods, who was a student actuary at the time, was a great help to me with the simulations and stochastic mathematics in the 1977 paper. He is still helping me with maths and stochastic simulations!

It took more than 20 years for my 1977 paper to be recognised as breaking new ground. I hope that it won’t take as long for my smoothed equity proposal for auto-enrolled pensions to be recognised. If it does, I’ll surely be well dead!

For an Internet link to more information, click here

To see a document related to this News Item, click here

Introductory comments on Whelan & Hally paper at SSISI meeting, 25 May 2023. The earlier written submission was published on 15 May 2023

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This is the text of the submission that Brian Woods and I made to the meeting of the SSISI on 25 May 2023

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Brian Woods and I had been trying for years - literally - to ensure that buyers of structured retail products were adequately informed of the pitfalls of such products. We found it very difficult to persuade the Central Bank of Ireland (CBI) of their dangers. We eventually decided on a paper to the Society of Actuaries in Ireland to publicise our campaign.

Here is the YouTube link to meeting of the Society of Actuaries in Ireland at which our paper was presented and discussed: YouTube Presentation

For an Internet link to more information, click here

"The Currency" has published an easy-to-read summary of the paper on auto-enrolment I presented to the Society of Actuaries in Ireland on 20 January last. Here is the link to the article: The meitheal: a simple idea to double the size of our pensions

Friends have been too kind to ask, but others haven't been so shy in asking what happened with my short position in Tesla since diary update 20 of 17 November last. Did I lose my shirt when the price rose to its current level of around $900 a share?

The following post of 5 February on the website askaboutmoney.com (#543, page 28 in the thread "The Perils of Shorting: A Real Life Example") reveals all:

"I also threw in the towel. Over the last few months, my efforts at risk management required me to keep trimming my exposure as the price increased. The crazy price increases meant that I had to close part of my position almost every day, each time at a higher price. It got quite dispiriting and eventually started coming between me and my night's sleep. That's an absolute no-no in my book - my ideal is to buy a stock and go to sleep, waking up every 6 months or so to check if the investment thesis is still intact - so I decided to close the last of my shorts earlier this week. Luckily, I got out before yesterday's complete madness, when the price briefly rose above $900 a share.

"It has been a chastening experience. Never has Keynes' maxim, which I quoted at the start, about markets staying irrational for longer than you can stay solvent, been more apt. I've also learned the truth of another market maxim: "Don't short a story stock in a bull market." Tesla is the ultimate story stock and it was a bull market, so why did I persist? I don't know. For what it's worth, I believe that my analysis in the article that launched this thread will be proved accurate, but I won't be trying to profit from it."

For an Internet link to more information, click here

Yesterday’s (4 July) update on my investment diary (“Shelling out on a tortoise”) analysed the main contributors to the total return of 17.2% in the first half of 2019. I have been asked the contributions to the return in the half-year from (1) the Tesla short position and (2) from my flirtation with Charles Taylor, as discussed in update number 13 of 7 May. (3) I have been also asked the impact of fees and charges.

I’m pleased to oblige.

1. The Tesla short contributed 1.3% to the total return in the first half. Tesla's share price fell from $332.89 at 31 December 2018 to $223.39 at 30 June. It has rallied slightly in the first few days of July, mainly on encouraging production and sales numbers for the first half. I'm keeping my short in place, at least until I see whether the higher sales (some at reduced prices) have translated into higher profits. I'm a great believer in the adage that "Sales are vanity; profit is sanity." Sanity is in short supply in Tesla.

2. My brief adventure with Charles Taylor contributed 0.4% of the 17.2% return in the period.

3. Fees and charges reduced the half-year return by 0.5%. Included in this are the provider’s fee for administering my ARF (Approved Retirement Fund) and AMRF (Approved Minimum Retirement Fund), stamp duty on share purchases and broker’s commission on purchases and sales. Also included under this heading is the rollover charge on the sterling hedge (the hedge is rolled over every quarter). Other bid-offer spreads are not included.