The collected rants of Jnamdoc


Read Jnamdoc’s comments and emulate!

One of the best things about running my blog is attracting comment which are better than the blogs themselves. I enjoy many an evening reviewing these comments and chortling.

One comment – ator who falls into the “better than the blogger” category is Jnamdoc, a mysterious figure who clearly knows a thing or to and is not afraid to let what he thinks – and feels – be known. Here are four of his latest rants – all of which are worthy of blog status.

On insurance buy-outs of DB funds

Transferring DB funds of c£50bn per year to an oligopoly of (cautious, gilt laden) insurers will deepen the vortex of unproductivity. We’re in a hole and we keep handing out shovels. It’s a catastrophe in the making. But not for the insurers – the built in profit on insurer transfer / buy-in is circa 15 – 20%, (so £7bn – £10bn per annum) and by design over cautious.

If this is allowed to continue, this will give rise to a truly colossal transfer of value away from working class scheme members who’ve spent a lifetime contributing to their pensions (along with scheme sponsors) to the financial insurance sector. You can understand why they’d have capacity constraints – they never expected to have such a bounty fall into their laps, and they are scurrying like crazy to get the staff to pick up this windfall.

Such a uniform approach and scale of expected asset and value transfer is not ‘normal’ – it represents a windfall of a magnitude that makes the recent windfall profits of the energy companies look like a casual restaurant tip.

Its another unintended (but bleedingly obvious) consequence of the short-sighted and disastrous UK pension regime foisted upon the pension schemes by the unaccountable TPR this last 10-15 years. There would be an uproar if it anyone had suggested 15 years ago that we should embark on a process leading to the ownership and management of all UK businesses and productive capacity to be transferred to a handful of owners. Why can that ever be acceptable for pension schemes and their assets. Ref previous blogs – TPR needs to come under some direct Ministerial oversight, and with some clear alignment to the greater economic good. Surely!

On John Lewis Pension Trust losing 39% of its assets in 2022

  1. it wasn’t the pooling of risk that caused the loss of asset value at JL. It was collective group-think and falling into the LDI trap in paying the resulting “idiot premium”, and in a way where they seemed to be “hedged” 125%…?
    2 – productivity solution- invest!. Actuarial training should require they consider the counterfactual and the mitigation every time they use the word “risk” in an investment context. Often they mean “returns”. This has led to the confusion or group think to consider that only insurers / actuaries can manage “risk”, when actually they are custodians now of the nation’s wealth and it is required yet debatable as to whether they have the mindset to generate returns (which unfortunately is not the same as managing “risks”, something to which they are well suited).

On the prequel to the John Lewis problem

Henry – very interesting just reading back on one of the related articles – your 2013 blog on the issues facing John Lewis and pension schemes. Well done and really quite prescient, you commented that:

“His view was that the lasting pension legacy of Gordon Brown’s tenure as Chancellor was the announcement in his March 2003 budget of a move to guarantee pension rights which became enshrined in law in the Pension Act of 2004. The introduction of a Statutory Funding Requirement for pension schemes marked the point at which pensions stopped being an activity of mutual endeavour and became a corporate liability.”

How Steve Webb must wish that he could return to a world where the pension contract between member and employer was one of mutual respect and understanding and not based upon statutory obligations!

The obligations that Gordon Brown visited on pensions are onerous enough to have collapsed defined benefit provision well beyond the declines illustrated in the chart above.

If the next European Pensions Directive is enacted then the numbers of private sector workers accruing defined benefits will approximate to zero as we discover just what “guarantees” mean in a pan-European insured sense.”

And I heard it back in 2004 from some close to the regulation design that the reason for the 2003 changes (and indeed the granting of superpowers to TPR) were to avoid any political embarrassment from scheme failure happening upon the then Chancellor as he waited his ascension to (albeit short lived) the top job. Whether this is true I do not know, but if it is it shows the is inevitable effect of what happens when politicians meddle, and move away from investment fundamentals.

On the reason for leveraged liability

It’s just bewildering economic suicide on a macro scale. And that’s before we factor in the drag deficit contributions have on growth (ref earlier Treasury study on this).

No doubt those of us who challenge the dogmatic shortsightedess of leveraged LDI will again be labelled as “a few naesayers”, and they’ll conveniently continue to blame it on Kwarteng -,for not being aware of the limitations of the maths model they’d built their world (and our futures) around. The LDI debacle and gilt crash wasn’t caused by Kwarteng – whatever your political hue, Govts are allowed to promote political agenda’s including growth, and shouldn’t be hamstrung by a little understood maths model that’s suits the consultants, yet kills an economy.

TPR fully complicit in this, yet totally asleep at the wheel. At lest the top two there have moved, but has TPR learned anything? Given a complete lack of hubris displayed and continual strive for more of this statist regulation, I doubt it.

With great power comes great responsibility. TPR had independence aplenty, and it was unclear who if anyone they were accountable to or for. Anyone who has witnessed TPR and DWP will have seen DWP were/are enthralled by the “experts” rolled out by TPR and any narrative from DWP is indistinguishable from the soundings of TPR. “Experts” who it seems with a great uniformity thinking, borne of the consultancy backgrounds to which they return.

TPR’s influence, unchecked, has ran amok through the prospects of the once thriving UK DB pension landscape this last 2 decades, unseated a standing prime minister and chancellor and without critical intervention would have crashed the gilt market for Govt, and overseen the destruction of value with a now accepted (previously denied – Mr Fairs “its a timing thing”) loss of £500bn on the nations DB assets.

It still has directional influence over the investment of £2trn (formerly nearer £3trn, ’till we lost c£500bn) DB scheme assets (and thank goodness they not been able to sully the independence of the LGPS regime), with more firepower to influence the macroeconomic direction than all Govt depts other than Treasury.

The scale and influence of pensions, especially the enormous pools of DB assets is too significant for TPR to be left to its own devices, and TPR and pensions needs more heavyweight oversight from Treasury/Govt and a broader remit, recognising that only an invested healthy growing economy can afford to provide its age retired with a living wage.

Thanks to Jnamdoc and all who comment on this blog. Keep it coming!

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 The collected rants of Jnamdoc

  1. Jnamdoc says:

    LOL, thank you, I think. : – rant “speak or shout at length in an angry impassioned way”. I’ll accept impassioned. At length – well, consistent.
    If my soundings via your blog Henry (thank you) can nudge even one manager or trustee to think independently, to look at the bigger picture, and to have the courage to ask ‘why’ they are being advised or steered down a particular route – and not to accept the stock reply “because its actuarial orthodox or everyone else is doing it”, and to consider who really benefits in the long run, then it will have been worth it. Ownership (the rights to the risks and rewards) and stewardship of the nation’s pension assets is just too important, and the benefits should accrue to the members, and not be treated as a spitting roast for others to feed off.

  2. henry tapper says:

    I am sure they are having that impact.

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