UK – One of the UK’s top actuaries has hit back at criticism of the profession, saying the case for investing a pension fund portfolio entirely in bonds is far from clear.

Tom Ross, the president of the Faculty of Actuaries, concedes that a pension fund “stuffed full” of bonds instead of equities “would be less volatile” and that pensions would be less risky for employees.

“But companies going through hard times would not have been able to walk away from the interest instalments and capital repayments on their debt in the same way that they could (and did) take holidays from their pension schemes,” Ross says.

“The added protection that bond-filled pension funds would give employees would also seem to be counterbalanced by extra risk for shareholders and perhaps ultimately in job security for employees – something else that needs to be factored into the debate,” Ross says.

Ross’s remarks – in a newspaper article - are the latest salvo in a war of words taking place on the finance pages of the UK press about the responsibility of the actuarial profession for pension deficits.

Consultancy firm Watson Wyatt entered the fray when its senior partner Paul Thornton wrote in the Financial Times that pension funds “collectively cannot avoid carrying the risks of investment in the real economy and it is unhelpful to pretend that this can be avoided by a switch from equities to bonds”.