My spy at the PMI passes me a copy of this month’s Pension Aspect with the finger pointed at this article by David Fairs.
Those versed in current a- Fairs , will have noticed a relaxation in the Regulator’s tone with regards DB schemes that want to stay open.
When David opens an article confirming common ground, his natural balance will pivot him to areas where the Regulator feels (to use a racing term) the ground is becoming “false”.
So in this article, where Fairs quickly moves to a refreshingly candid admission/
It seemed elegant to us that a truly open
scheme could not mature, would not be
expected to de-risk and would be able to
continue to invest in a long-term way.
My friend Derek Benstead has produced an illustration which may not be as elegant as David but puts in pictures what David says in words.
There is a nice irony here. The first time I heard David speak of what we now as the DB funding code proposals, was at a First Actuarial conference, where his comments went down like a lead balloon. Derek was in the audience and so was I.
What has happened in the intervening 18 months has been nothing short of miraculous.
The industry has apparently moved towards the regulator
In Bespoke, we could see perfectly
acceptable scenarios where open
schemes propose to fund and invest
based on their expectation that they will
remain open. But trustees should be able
to evidence to us how they could (among
other things) manage the risk of their
scheme closing or maturing faster than
expected. All part of good integrated risk
Going Bespoke may mean more regulatory
engagement but, in many cases, there
is unlikely to be any (or only minimal)
additional engagement if the thinking has
been done, is clearly explained and well
This is almost exactly what we said, but we
would go further and say that just ‘planning’
is not enough; it needs to be something
more concrete and evidenced. However,
I’m comforted that we may not all be as far
apart as we thought.
This will come as news to the delegation of open schemes that met with the Pensions Minister, to the monstrous regiment in the House of Lords who fought so hard for the Bowles amendment and for the many people who have curated their thoughts on this blog.
They must now be recovering from a waking dream of nightmarish complexion. Like lost sheep they wandered from the fold of the Regulator’s care and collectively struggled with inner demons that caused them to misinterpret the Regulator’s intentions.
But now there is rejoicing in Brighton that the lost sheep have returned and an expectation that they will accept their foolish peregrination.
This interpretation of the last eighteen months is truly elegant, it is also – to use a phrase much loved of my friend Con Keating “utter bollocks“.