Bob Compton has kindly forwarded his responses to tPR’s consultation. Bob was reticent as his responses are short , to the point and in a single word “blunt”.
We very much need voices like Bob’s and his concision brings with it precision.
Due to technical difficulties these responses are not numerically consecutive. They are however entirely consistent and cumulatively build on other responses.
Instead of gilts relative discount rates, Bob, you suggest best estimate (expected returns) “with a modicum of prudence”? That doesn’t suggest enough prudence to me, writing as a pensioner who nevertheless hopes younger members will enjoy decent pensions too, whether from DB or DC.
What investments do you propose? Did you read GAD’s update paper dated 11 August 2020, which TPR released about a fortnight later just before the end of the consultation period? Not many did, it seems, as even former GAD’s Jon Spain only commented on it is an afterthought.
Jon Spain added this: “The numbers are somewhat surprising. For example, the same mean return of 5.3% pa over 10 years is expected on 3 different assets, with hedging not being explained. Further, that the correlations between Global Equity (ex UK) “hedged”, hedge funds (US) and global corporate bonds seem remarkably high.”
5.3% pa would seem to be GAD’s “best estimate” for the return-seeking part of the portfolio, and somewhere around 1% for the “matching” part of the portfolio? Proportions to be determined by trustees, Bob, on taking advice from consultants, most of whom seem biased towards de-risking?