“Trust us – we’re actuaries?” Don’t bet blind on your retirement!


Contribution levels are not a primary indicator of a scheme’s value for money.

Adrian Boulding is wrong to hi-jack the PPI report and Value for Money Debate to promote higher contributions. Pensions should not be treated as a beauty parade.

Here’s his comment on my recent blog introducing the PPI paper.

We can sum up the order of importance then as
1. Contributions
2. Investment Return
3. Charges
As an actuary I agree with that


What Adrian’s talking about is what matters to member outcomes and he’s referring to a comment in PPI’s VFM report

Consistently positive real investment returns, within appropriate volatility parameters – both upper and lower – are the most significant driver of VFM in terms of net returns. But outcomes for savers in terms of meeting target income levels are most influenced ultimately by the level of contributions.

Adrian knows very well that he is deliberately muddying the waters.

And he went on to repeat this canard the very next day at the Professional Pensions DC conference.

Let’s be clear -it is obvious that if you put a huge amount into a pension , you will get a huge amount out of your pension and probably more than if you put a smaller amount in.

But that tells you nothing of the value the scheme has given you for your money.

The job of a pension scheme is to manage your pot and then help you turn it into a pension. The trustees of the  scheme is now responsible for telling you how well it is doing this.

It can be argued that a well run scheme will attract money but that reinforces the PPI’s contention that the over-arching role of governance dominates the VFM debate. It is categorically not the job of trustees to promote us contributing into their pension scheme over other ways for us to spend our money.  Nor is it the job of trustees to define the scheme’s value for money by measuring  contribution levels (discretionary or otherwise),

If we allowed schemes that received high levels of discretionary contributions a five star value for money rating , we’d be handing VFM to the marketing department . We’d be  applauding pension schemes where sponsors and members have deep pockets while jeering well-run schemes whose efforts to improve efficiency were being ignored.

It would mean  that a scheme run by a bank with average salaries of £50,000 could demonstrate better value than a scheme like Nest or NOW pensions with a much lower earning member with less disposable income.  VFM can be white washed just as ESG can be green washed.

Adrian signs his comment off as “an actuary” and I’m afraid that actuaries have not done much for DC pensions. The phrase “it’s only DC” still rings in my ears, from my time working in an actuarial practice.

DC punters deserve better

“Punters”, which is what those investing in workplace pensions are, get far better information on horses, dogs and football teams than they get on their pensions. We can  follow the fortunes of horses live on our phones and get up close to our equine investments by visiting a race track.

But pension schemes take our money and give it back to us maybe forty years later with no reporting on the value we are getting for our money. We are taking the risk, we deserve to know how our horse is running – in running!

If the only thing that Adrian want schemes  to promote  is their capacity to ask for our money then he is asking us to enter into a bargain where we  take all the risks and the scheme manager gets paid a percentage of our money whether that money does well or badly. That is how most people think pensions work, which is why most people aren’t too impressed with the VFM of their pension.

There is a fundamental issue here and it can be summed up in one word “ACCOUNTABILITY“.

Pension funds that hi-jack the VFM debate can blame punters for bad outcomes because they didn’t bet enough. But punters know better than to bet blind.

Publicly available, consistent, robust and complete comparative data is a vital starting point for authoritative VFM assessments and broader market context. The evidence suggests that this requires a trusted regulatory framework to facilitate.

It is about time that punters in pensions got detail of their investment’s form and suitability for future investment. It’s about time actuaries like my very good friend Adrian Boulding, put their performance numbers on the table rather than cajole  us into putting money into their satchels!

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 “Trust us – we’re actuaries?” Don’t bet blind on your retirement!

  1. Peter Tompkins says:

    I don’t see it as badly as you. Adrian says that positive real investment returns drive VFM. But he then correctly points out that outcomes depend much more on what goes in. I’m sure most agree there.

    Isn’t his point correctly that the biggest risk to people having decent enough retirement incomes is not deferring consumption enough during working life. I don’t read his comment as defending an absence of VFM focus.

    • henry tapper says:

      I didn’t sense that deferring was the issue- contributions were! Deferral is actually a problem caused by anxiety that money might run out. Our obsession with saving blinds is to the problem of spending

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