Public Services Management: Government actuaries develop a global reach: Foreign states are turning for advice to the professionals who monitor our pensions, insurance and social security

'TIS the season of the number crunchers. Busy weeks for those who take stock of the year that is ending and try to project how the future will add up. But few have been as pressed as those who have been measuring government policies and their effects on the governed in the run-up to last week's Budget.

A key force in those calculations has been the Government Actuary's Department (GAD), whose 40 professionals influence and safeguard much of our financial life. The department, which will be 75 years old next summer, grew out of the National Health Insurance Act of 1911. The following year Alfred Watson, later Sir Alfred, a consulting actuary and partner in his brother's firm, was appointed Chief Actuary to the NHI's joint committee to run the small sub-department that was advising it.

During the First World War the work increased and in 1917 the Treasury appointed him the first Government Actuary. Soon his work included the management of the GAD, established in June 1919 to provide government with a centralised actuarial service and to take on any such work for the public sector. Part of his job involved pensions, introduced in Britain in 1909.

Today the GAD's responsibilities are vast: it projects the effects of population changes, supervises insurance companies and friendly societies, advises the government on occupational and personal pensions and the financial management of social security - and ensures that Ernie (the Electronic Random Number) is as impartial to Premium Bond punters as its name promises. Every month the Government Actuary has to sign a certificate confirming that Ernie is not favouring particular numbers.

Chris Daykin is the seventh Government Actuary. He was appointed in 1989, a time of immense change for the department. With the move to make the Civil Service more business orientated, the department began offering actuarial consultancy services in Britain and abroad. Though still a government department responsible to the Chancellor of the Exchequer, it is also a busy financial services consultancy.

It has a corporate plan and a stylish brochure, and actively markets itself, competing for clients. These include ministers, government departments and other areas of the public sector - the National Audit Office, for example - as well as an increasing number of foreign governments.

Mr Daykin describes it as government having its own in- house actuarial consultancy firm. This is good for the profession, he says, as it improves the likelihood of actuarial aspects of legislation being properly considered, and also leads to government awareness of possible legislative solutions that rely on actuarial skills.

'We are competetive. We compete directly with actuarial firms, and tender for the job,' he said. 'Our advantage is that our charges are economic. (Fees exclude profits; only costs have to be passed on.) The disadvantage is that potential clients may be looking for other services, such as computer or administrative, rather than solely actuarial.'

Clients pay fees on the usual consultancy terms, based on the time spent on a commission, plus office overheads. Mr Daykin stressed the GAD's independence. 'The fact that I am the Government Actuary could imply that this influences me. But I give advice independently, in my own name. The Opposition as well as the Government rely on my reports.'

In the past year GAD has introduced a computerised account system, it is preparing a management information system as part of its IT strategy, and it is emphasising training, personal development and appraisal to give staff, both actuaries and non-actuaries, the skills they need to meet client requirements.

Since 1989 the number of professional staff has increased from 25 to 40 and performance- related pay has been introduced, replacing a senority scale that offered no scope for rewarding merit.

'We are promoting a culture of excellence and are closely in line with private sector salaries. Our services are developing and we meet increased demands in all the areas we work,' said Mr Daykin.

Trainees are paid pounds 18,000, increasing to pounds 33,000 when they qualify. Salaries can rise to pounds 60,000, based on performance and merit.

The GAD's allowance from Parliament in the last financial year was just under pounds 500,000, which covers the salaries of 80 staff, including 15 trainees, and pays for two key projects. One is a population projection for the next 70 years, by age, sex, and marital condition, which will be used for all government planning such as the number of teachers required and future demands on the health service. The other is a survey, produced every four years, of occupational pension schemes: type of benefits, size of employee contributions and so on.

The GAD has to advise the Department of Social Security, the Treasury and the Inland Revenue on such aspects of occupational and personal pensions as taxation, funding standards, protection and contracting out of SERPS, the earnings-related section of the state pension.

Any changes to SERPS could have a big impact on occupational pension schemes, as will the change in the pension age for women announced in the Budget. In recent months, the GAD has been busy examining the options.

As a consultancy, it advises pension schemes in the public sector, including those of teachers, the health service, police, fire services and armed forces, British Coal and the now privatised dockyards.

Part of its social security function is to prepare reports for Parliament each year before benefits are raised and contributions reviewed (incoming and outgoing funds must be balanced), and to set out the effects of changes. Every five years the GAD reviews the long-term costs of benefits and the contribution rates which are likely to be required.

A further role, mainly carried out by the GAD's insurance directorate is to supervise insurance companies, monitor their financial strength and inform the Department of Trade and Industry of any problems.

Foreign governments increasingly seek advice. Japan, the United States, Hungary, Poland, Russia and the Czech Republic are among countries which have been given advice on insurance company supervision, on legislation for occupational pension schemes and on training actuaries. There has been help, too, for Commonwealth countries lacking actuarial resources, such as a social security review for Mauritius and help with insurance supervision for Cyprus.

Mr Daykin said one of the attractions of working at the GAD is its proximity to the political scene - the daily contact with the Treasury and other departments and answering the questions that come from Parliament. And when the House of Commons is discussing relevant subjects, a staff actuary is there to pass notes to ministers.

'Our job is to assess the impact of policies, and leave the decisions to Parliament. Our work is to ensure that people are secure,' Mr Daykin said.

(Photograph omitted)