Office
of CommunicationsOF MATHEMATICS
DEPARTMENT
NATALIA A. HUMPHREYS
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CAN BE HARD …
Office ofTRAVEL
Communications
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ABOUT ACTUARIES…
Office JOKES
of Communications
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Office of QUESTIONS
CommunicationsTO ANSWER
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WHAT
IS ACTUARIAL SCIENCE?
Office
of Communications
ACTUARIAL SCIENCE APPLIES
TO ASSESS RISK IN THE INSURANCE AND
FINANCE INDUSTRIES
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Office of Communications
WHO ARE ACTUARIES?
ACTUARIES ARE PROFESSIONALS WHO
USE THEIR KNOWLEDGE OF STATISTICS,
FINANCE, AND BUSINESS TO
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Office
of Communications
WHERE
DO ACTUARIES WORK?
ACTUARIES ARE EMPLOYED IN THE
(EITHER PROPERTY AND CASUALTY OR LIFE AND HEALTH)
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WHAT
DOES THE WORK INCLUDE: GENERAL?
Office
of Communications
ACTUARIAL WORK INCLUDES:
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Office of Communications
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MORE
JOKES ABOUT ACTUARIES… QUESTION
Office
of Communications
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MORE
JOKES ABOUT ACTUARIES… ANSWER
Office
of Communications
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WORK
PROPERTY AND CASUALTY (P&C) ACTUARIES
OfficeOF
of Communications
ESTIMATE
HELP DESIGN
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Office WORK
of Communications
OF P&C
ACTUARIES (CONT.)
CALCULATE
ENSURE
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Office
of AND
Communications
LIFE
HEALTH
ACTUARIES
ESTIMATE
HELP DESIGN
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Office LIFE
of Communications
AND HEALTH ACTUARIES (CONT.)
HELP COMPANIES DEVELOP
AMONG A PARTICULAR GROUP OF PEOPLE WHO HAVE SOMETHING IN
COMMON SUCH AS
• LIVING IN CERTAIN AREA OR
• HAVING A FAMILY HISTORY OF ILLNESS
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Office LIFE
of Communications
AND HEALTH ACTUARIES (CONT.)
THIS IS BENEFICIAL TO BOTH THE CONSUMER AND THE
COMPANY
LIFE INSURANCE ACTUARIES
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Office of Communications
ACTUARIES
IN OTHER FINANCIAL SERVICE INDUSTRIES
MANAGE
DEVISE
ADDRESS FINANCIAL MATTERS
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PENSION ACTUARIES
WORK UNDER PROVISIONS OF ERISA
ERISA SETS MINIMUM STANDARDS
ADDRESS FINANCIAL MATTERS
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GOVERNMENT ACTUARIES
HELP MANAGE
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Office of Communications
REINSURANCE ACTUARIES
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Office of Communications
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MORE
JOKES ABOUT ACTUARIES… QUESTION
Office
of Communications
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MORE
JOKES ABOUT ACTUARIES… ANSWER
Office
of Communications
YOUR
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Office ofWHAT
Communications
ACTUARIES DO: GENERAL
• HELP DETERMINE CORPORATE POLICY ON RISK
• TESTIFY BEFORE PUBLIC AGENCIES ON PROPOSED
LEGISLATION THAT AFFECTS THEIR BUSINESS
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Office ofWHAT
Communications
ACTUARIES DO: GENERAL (CONT)
• HELP COMPANIES DEVELOP PLANS TO ENTER NEW
LINES OF BUSINESS OR NEW GEOGRAPHIC MARKETS BY
FORECASTING DEMAND IN COMPETITIVE SETTINGS
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Office
of ACTUARIES
CommunicationsDO: CONSULTING ACTUARIES
WHAT
• PROVIDE ADVICE TO CLIENTS ON A CONTRACT BASIS
• HELP COMPANIES REDUCE THEIR INSURANCE COSTS BY
OFFERING THEM ADVICE ON HOW TO LESSEN THE RISK
OF INJURY ON THE JOB
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WHAT
DO: CONSULTING ACTUARIES (CONT)
OfficeACTUARIES
of Communications
•THE CURRENT VALUE OF FUTURE PENSION BENEFITS IN
DIVORCE CASES, QUALIFIED DOMESTIC RELATIONS
ORDER (QDRO)
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



Financial Security at retirement
Main concern of retiring employees
Vehicles used to obtain it
Differences between defined benefit and
defined contribution plans
Incentives employers and employees have for
contributing to employee’s retirement.
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COMPONENTS OF FINANCIAL
SECURITY AT RETIREMENT
SOURCES OF
RETIREMENT INCOME



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Government = Social
Security
Individual = Personal
Savings
Employer = EmployerProvided Retirement
Plans
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Office of Communications
SOCIAL SECURITY


Provides most basic
level of retirement
income
Emphasis on lowerincome earning
individuals
MEDICARE


Basic level of postretirement medical
coverage
Significant out of pocket
costs for enrollees



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Prescription Drugs
Deductibles
Coinsurance
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Office of Communications
ENCOMPASSES



Establishing retirement
income goals
Maintaining a standard
of living consistent with
those goals
Contributing to an
individual retirement
vehicle
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WAYS TO INVEST



Contribute to an IRA
account or 401(k) plan
Purchase life, disability,
or medical insurance
SAVE, SAVE, SAVE!!!
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Office of Communications

Defined Contribution (DC) Plan
 Defined
Benefit (DB) Plan
 Post-Retirement Medical Plan
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DEFINED
CONTRIBUTION PLANS



An individual account is
established for each
employee
Employers can contribute
by matching the ee
contribution
The future value is
indeterminable due to
unknown investment
returns and contributions
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DEFINED BENEFITS
PLANS



Promises to pay a
specified benefit at
retirement age.
Can provide benefits
payable upon death,
disability, or prior to
retirement.
Benefits based on pay,
service, expected SS
benefits.
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An employee
who is planning
to change
employers
every 3 to 5
years
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A 55 years old
expecting to work to
age 65 and expecting
for the market over
the next 10 years to
be a bear market
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A company starting a
retirement plan and
wishing to control
costs associated with
the plan.
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REFERENCES
1 BUREAU OF LABOR STATISTICS
HTTP://WWW.BLS.GOV/OCO/OCOS041.HTM
2
WATSON WYATT & CO. PENSION PLAN TRAINING MANUAL
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Office of Communications
MORE INFORMATION?
WANT TO KNOW MORE ABOUT ACTUARIAL FIELD?
CONTACT:
WWW.UTDALLAS.EDU/~NATALIA.HUMPHREYS
NATALIA.HUMPHREYS@UTDALLAS.EDU
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