“Right in theory, wrong in practice” – the great funding debate.

t The antediluvian clash of Titans that has been waged on twitter since late last week shows no sign of abatement. As I watched the Winter’s Tale at the Globe, seven bells were being knocked out of Messrs Ralfe and Brown and Bartholomew  on the one hand , and Cooper, Tapper and Rowlinson on the other. If these are the chief protagonists, there is a cast of hundreds who have been observing and commenting. This is where the grand slugfest had got too late last night!

This is a very male thing, I suspect that as in medieval jousting tournaments (or possibly antediluvian Titan clashes), the women watch on with mild amusement that their men-folk can be so childishly macho!

There is no obvious conclusion

Mark and I (with moral support from George Cooper) , will continue to work at First Actuarial to keep our schemes solvent and sometimes open. John and Jeffrey will continue to guard against the irrational exuberance of #FABI and uphold the principles of neo-liberal economic theory (I believe this to be what Jeffrey is referring to).

Thankfully, Con Keating refuses to join Twitter or we would have no space left on our timelines!

John is actually a pension scheme trustee (and a very good one by all accounts) and Mark knows enough about economic theory to dispute with E Bartholomew about option pricing. I am totally hopeless at both actuarial and economic theory, but I can make some behavioural observations – so I will.

Restoring Trust

It is important that both sides of this debate, remember that we are not playing with our own money, but with other people’s money. We are the guardians of that money and for us to label the other side dishonest or untrustworthy is to undermine the general position.

The argument is not about ethics, but about being wrong or right in abstract terms and practical terms. If I could paraphrase the exchange at the top of the page, Jeffrey is saying “it should work like that” and Mark is saying “it should work like that and it doesn’t.

Part of the problem with economic theory, is that it gave rise to the bunkum that caused the financial crash. I remember sitting in a room in a viila near Rome (when I still did junkets), listening to several presentations explaining how junk could be turned into gold using something called a collateralised debt obligation. My friend, who was a banking lawyer at the time – referred to this as alchemy. It made sense in economic terms but the junk turned out to be junk in the end, and the world went into financial meltdown.

This is the kind of cheap shot that Mark could be making on twitter when John claims that he is setting up Ponzi schemes, I make the point on this blog, because Mark and I know that John is not selling CDOs and we are not selling Ponzi Schemes. We are – when the tweeting’s done, trying to get people’s pensions paid in full!

Understanding behaviour

Why I side against the pure economics espoused by John and Jeffrey and Ed, is that pension schemes are run by people for people. Despite the attempts to swap trustees for Corporate Trustees (and no doubt someone has invented the Robo-Trustee) , the behaviours of Trustees are still driven by ethical principles (fairness, protecting the vulnerable, a willingness to go the extra mile). These considerations do not get written into economic manuals, but they still exist.

Similarly the beneficiaries of pension schemes do not understand pensions in terms of economic theory but in terms of outcomes.  So while John and his colleagues may consider the phrase “wage for life” dishonest, the 90% of the members of the CWU who vote for a “wage for life” solution rather than a DC plan, consider the phrase a very good outcome indeed.

Whatever the means of getting there, it is clear that the 145,000 postal workers are not going on strike, Royal Mail has seen a recovery in its share price and morale at RM’s depots is reported to be good.

That this may be one great con-trick visited upon the postal workers by the actuarial profession remains possible, but it appears to be increasingly unlikely, WTW, Aon and First Actuarial are speaking with one voice in modelling outcomes of a CDC solution.

I think it fair to say that in the case of Royal Mail, the progress of CDC from a few lines in Pensions Act 2015, to the expected solution to the intractable dispute between RM and its staff, is proving a spectacular win for behavioural rather than neo-liberal economics.

The same could be said for auto-enrolment. Behaviour matters. Some times it is the behaviour of a few people (Millidge, Salt, Pullinger, Eagle) that makes the difference.

The debate must go on!

From time to time, I get a Direct Message from a well meaning judge, asking me to stop slugging it out with John or to desist in my feeble  little rabbit punches to Sam Pickford – or whatever.

I’ve no intention of doing so! The debate will not be won by either side, because neither side wants the clash/tournament/slugfest to conclude.

Nor – I suspect do most of the spectators!

This is what debating is about, and it’s carried on to the exasperation of both sides, but without respite and for as long as we have fingers and keyboards!

It is a debate about the future of pensions – especially open collective pensions. Frankly it is what Mallowstreet was set up for, but could never quite achieve, due to its debate being sanitised by the regulatory considerations of the “wall garden”.

Right in theory – wrong in practice

If you’re not on twitter, you may be wondering what this blog is about. If you are on twitter and want to get an education in heavyweight debate, search for












@e_Bartholomew  and many others!


This is the debate of the age, come and join in.

I close , with what is my position, one created in large part by the thinking of Derek Benstead and Hilary Salt. I work for First Actuarial because of these people and the help they give me. I hope you can make sense of these slides, which were put together to explain CDC to Cambridge Dons! If you can, then I’d be interested in your views, if you can’t – then tell me – and I’ll try to make them better!




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to “Right in theory, wrong in practice” – the great funding debate.

  1. Michael Clark says:

    Sorry Henry

    I can’t see a link to the slides. Have I missed something?

    Best Michael

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  2. John Hutton-Attenborough says:

    Michael, The presentation screen in the body of the document is the slide deck. Just press right tab to move to next slide.

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