How mean is my valley? Why have we given up on pension prosperity?



Britain is one of the great economic powerhouses of the world. We are a strong nation that should be most confident in ourselves and our capacity to manage our own future. In the past few days we have seen short-term numbers on GDP growth that shows that we are not in a Brexit funk but actually benefitting from the devaluation of our currency. Instead of a withdrawal from Britain, Nissan is backing our manufacturing capacity in Sunderland because it sees our motoring industry as productive, with a strong skills base and stable worker relations.

This country, that has long been held up as an example for its private pension, has swung from here to zero in the last twenty years.

The Pensions and Lifetime Savings Association has recently published a report that sounds a gloomy note from the off  ( this from Ashok Gupta’s foreword).


For a clear analysis of the PLSA paper as a whole I’m indebted to this First Actuarial Publication.

  1. The current system is too fragmented. Work should be undertaken to investigate the potential for scheme consolidation, which could help secure more economically viable schemes better able to deliver value to scheme members and their sponsors.
  2. The current regulatory approach to scheme resolution is inflexible. Work should be undertaken to investigate how changes to the system could deliver better solutions to scheme resolution and remove regulation that adds cost but has little or no tangible benefit.
  3. The current approach to benefit design and benefit change is rigid. Work should be undertaken to investigate how a more flexible approach to benefit design could be implemented to help sustain schemes.
  4. The current approach to pension scheme risk bearing is sub-optimal. Work should be undertaken to develop better measures of benefit risk.


I take issue with the paper on two counts

  1. It’s starting point
  2. It’s findings.

1. Initial error- Britain can afford to meet its pension promises

As with Brexit, so with pensions, the capacity of this country to meet its challenges is obvious, what is missing is the optimism that has seen us through similar challenges in the past.

One of my colleagues wrote to me recently (on what has happened to our funded pension system).

from the late 60s the capitalist class in Britain pretty much lost faith it itself. Many thought consciously or subconsciously that others would invest money more productively than they could. At the same time you’ve had a government and city backed campaign to re-invent Britain as financial services centre. What better than a huge pile of assets to stimulate this. And arguably that did work.

The funk that’s highlighted in the first sentence continues to this day. It is the fundamental premise of the PLSA paper. It reminds me of the state of mind that English batsmen had when facing Joel Garner and Andy Roberts, they were back in the pavilion before they’d started, scared of the consequences of getting on the front foot.

2. Findings – Britain should not give up on proper pensions

To follow the cricketing analogy, what the PLSA are advocating is giving up the five day game and moving pensions to 20/20. All the little pension schemes, like the smaller counties, should be packed into a few big schemes. The big schemes should be managed on the basis that things are more likely to go wrong than right. Any sense that pensions could be a force for good is lost in  hand-wringing. The same attitude is at play in cricket and in other parts of society.

But this trend towards consolidation comes at the expense of diversity, tradition and the promises that were made between generations. Let’s take benefits as an example. The paper is happy to recommend that huge schemes swallow little schemes, but those little schemes have particular benefit promises which are unique to them. You cannot homogenise those promises without creating winners and losers. You wouldn’t allow this to happen in a financial market (imagine homogenising bond durations!), why are the same people who own the bond markets, arguing that the benefit structures do not matter?

The reason must surely lie in that weasel phrase “de-risking”. The army of management consultants, pension consultants, corporate financiers, lawyers and (yes) actuaries, who advise trustees and populate the PLSA’s upper echelons, are convinced that the best thing to do with Defined Benefit Schemes – is to get rid of them. You will hear consultants talking of “buy-out” as if a holy grail. But there is nothing – once buy-out has been attained – to replace it; save for a DC system that is not (yet) fit for that purpose.

My view

I am not for playing fast bowling with an intent of getting back to the pavilion, nor of giving up on the pension schemes run by small employers.

I  contest the premise that our DB schemes are best managed by de-risking and that consolidation is an answer to the problems schemes have.

As is well known, First Actuarial wish to bring balance to the debate on valuations and have published FABI to show that the state of British DB pensions is dependent on the attitude you take to economic growth.

The funk that my colleague talked about is prevalent everywhere I go in London. People are talking about house prices falling, markets falling and pensions failing. But there is no evidence of the malady of Brexit outside the City, London and its financial markets have taken Brexit as a trigger for a national malaise, meanwhile the rest of Britain is getting on with what they have been given.

The pension funk mirrors the Brexit funk. I suspect that there are many people, not just outside of London, but inside of Westminster who are sick and tired of special pleading from pensions people. We are a strong and well heeled industry which is playing cricket off the back foot, closing down rather than building the game and doing nothing to support the wealth or enjoyment of the nation.

We can and should do better than the solutions put forward in the PLSA paper. We should start by understanding that a positive attitude to problem solving will get us through pensions current problems, as I hope it will get this country through the structural challenges we are currently facing.

How mean is my valley?

John Ford’s 1941  “How green was my Valley”~ may be sentimental, but it is a movie full of fighting talk which moved people to great things.

We need some of that now. Not this defeatist stuff from the PLSA.

If you want to read First Actuarial’s response to the PLSA consultation, please mail me on The views expressed in this blog do not properly reflect the subtlety or authority of First Actuarial’s response – but I trust they are in its spirit!


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to How mean is my valley? Why have we given up on pension prosperity?

  1. Con Keating says:

    Falling house prices, falling equity prices; great news, some things got cheaper.

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