Pensioner gulags for “Argentina on the channel”

Liz Truss knows a bit about pensions , that’s for sure and her attitude towards the triple lock will bring comfort to those of us, who would like it to continue.

They will also be pleased to know that her version of fantasy pensions has the state pension age vanishing over the boomer’s  horizon.

In the unlikely event of Liz Truss returning  to power..

We may not need pensions if Liz gets her way, she has a vision for Britain which Mark Carney has characterised as “Argentina by the Channel”.

This could result in a bit of reverse immigration (emigration?) as impoverished Brits flee to France on paddleboards, hoping to escape the ravages of a country unable to pay its bills.

Pensioners could become a breed of the past as those over 80 fall like flies as they queue for food banks and those under 80 work in geriatric gulags boosting Britain’s ailing productivity.

Joking aside

Growth is not a dirty word. For Britain to pay its state and public pensions as we expect to, we need growth in our gross domestic product (it’s what the Scape rate is based on). Without growth, employers, public sector workers have to pay more for public sector pensions. It’s to compensate for lower than expected tax revenues from lower than expected productivity.

Private sector pensions also rely on a strong economy, they are broadly backed by Government debt (gilts) which needs to be serviced and repaid if our DB schemes are to remain solvent. There is a symbiotic relationship between pensions and our national economy, both need to prosper.  Pensions mustn’t be seen as part of the problem but as part of the solution.

The Mansion House reforms aren’t  a ruse to get the City’s hands on our pension, they are about reconnecting our pension funds with what drives that growth – capital for investment.

Truss now sees pensions as unaffordable and that’s ironic because half a trillion pounds of our national wealth has gone to pay off banks for the money pension funds borrowed. Truss’ argument that pensions aren’t affordable is down to her actions. Truss is talking down pensions and  that’s no joke.

Pensions become affordable when we have growth but that growth has yet to happen. Growth happens with capital, our capital.  We haven’t seen pensions contributing much to the UK’s economic growth recently;  but given a fair wind and a change of mindset within the pension industry, we might avoid Britain becoming Argentina on the channel. We might have a decent society that pays its pensioners a proper wage in retirement.

Truss – never again



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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7 Responses to Pensioner gulags for “Argentina on the channel”

  1. byronmckeeby says:

    What Ms Truss knows about pensions may either come from special advisers or civil servants who briefed her, or from her hazy knowledge of flawed accounting standards, as she was one in a former life.

    Will MPs and/or former ministers change the terms of their own “gold plated” pensions? Probably not.

    • jnamdoc says:

      Agreed. No one in govt had oversight of TPR or gave any wider policy consideration the havoc it wrought, firstly on the provisions of DB pensions for working people, and latterly on our financial system through its (its still) de-risking language and indoctrination.

      It had and still has a fundamentally flawed remit – protect the PPF at all costs.
      – the PPF is a roaring success, job done.
      It did this by
      – killing DB for workers
      – overfunding the Schemes
      – professionalise / drive out the Trustee model
      – transfer schemes to insurers
      Job done.
      Economy trashed – oops!

      TPR. Of insurers, for insurers.

      Nothing can change until we have a Regulator that has the sole goal of actually improving and increasing retirement incomes, for members, on the side of members.

  2. Allan Martin says:

    Liz Truss is right that the UK needs growth to pay for the state pension “triple lock” but also to pay for the “lifetime pensions lock” on £2tn+ of index linked unfunded public sector pension promises, our “other National Debt”. Pensions for 5m+ teachers, NHS staff, police, firefighters, the armed services and civil servants are hugely deserved, not just for those coming off night shift as we read.

    The SCAPE (Superannuation Contributions Adjusted for Past Experience) discount rate (used to calculate benefits and contributions and retirement ages) has been reduced from CPI+2.4% to CPI+1.7% pa (H M Treasury – 30th March 2023). I suggest it is the most unappreciated but important actuarial assumption in the country.

    The public sector benefits were previously promised assuming real GDP growth of 3.5 – 2.4% pa. GDP growth at such rates hasn’t been achieved since the 2008-09 financial crisis and we have of course had Brexit, C19 and the war in Ukraine affecting actual and prospective growth. This suggests a consequential and massive intergenerational transfer of liability to future taxpayers – you, your children and grandchildren (if they don’t emigrate).

    £2.1tn of index linked pension promises assuming GDP growth averaging CPI+3%, that 3% average real growth assumed, minus 1.7% now expected, every year over say 35 years on a (2020) liability of £2.1tn suggests the biggest DB deficit admission in UK pensions history; ~£500bn? Does this prompt an arithmetic comparison to a Ponzi scheme?

    • jnamdoc says:

      wrong topic…?

    • byronmckeeby says:

      From one of Henry’s other blogs today (comparing UK with Australia):

      “Unfunded pensions [in the UK] closely monitored by a Government Actuary and managed as part of the Treasury’s overall budgeting.”

      Do you agree?

  3. jnamdoc says:

    LOL – you gotta admire the chutzpah of Carney.

    Its a bit like John Pierpont (J.P.) Morgan owner of the White Star Line, blaming the lifeboat crew of the Titanic!

    TPR induced LDI gave rise to an inevitable systemic failure of the lending and financial system (requiring immediate BoE intervention) through the use of uncontrolled and unmeasured financial leverage over the preceding decade – did Mr Carney have not responsibility for the banking system or financial stability?

    The Argentinian reference is more scapegoating and an attempt to appear prescient about something I’d mentioned a few months ago, and which falls into the range of increasingly likely probable outcomes.

    In the early noughties Argentina nationalised its commercial insurers (for not doing an efficient job on pensions, say). Under our TPR induced model, the insurers end up holding a predominance of gilts, effectively acting as a clearing house channelling cash from Govt (ie the gilts) in administering the payment of pension to DB members. At some stage (will?) UK Govt will see the merits of cutting out the middlemen (and their insurer profit) and paying the pensions (bringing them under direct control) directly?

    We do not have any moral or intellectual superiority over the Argentinians (or any other State busted by truly a appalling lack of policy or Regulatory oversight). Its just a question and the consequence of financial economic and politics…

  4. Allan Martin says:

    In reply to Byron.

    Do I agree? – short answer, NO.

    A longer reply with some things I wrote in April –


    The SCAPE (Superannuation Contributions Adjusted for Past Experience) discount rate was reduced from CPI+2.4% to CPI+1.7% pa. The minister acknowledged that this will lead to significant employer contribution increases in the delayed 2020 actuarial valuations but “these will be cost neutral* in department budgets” (from April 2024), i.e. fudged? Equivalent increased employee contributions, a later retirement age or reduced benefits might not be so easily explained! It is only a ~£8bn pa deferred pay cost increase or recognition! I’m sure any actual, potential or perceived conflicts of interest were appropriately addressed. *(Shame about independent schools and other participating employers).


    I now share a link to the background actuarial advice from the Government Actuary to H M Treasury. The advice letter of 19th January 2022 (a) was confirmed on 9th February 2023 (b) before the Ministerial Statement on 30th March 2023 (c). Some actuarial advice (page 5) is arguably worth noting –

    ““Allowing for actual GDP experience – this approach would ensure that past over- or under-payments are determined with reference to the actual performance of the income stream from which pension benefits are ultimately paid out. It would more closely reflect the position which applies in funded pension schemes whereby if the assets underperform then an additional deficit is created which must be corrected by additional contributions (or future asset outperformance).

    Since the current GDP-based methodology was adopted in 2011, GDP experience has been lower than the SCAPE discount rate in force. Arguably, therefore, the employer contributions to public service pension schemes have been, with hindsight, under-estimated throughout this period, when compared to the GDP-measure against which they are assessed. The financial effect of this is carried centrally by HMT and there are no direct consequences for departmental spending or budgets.

    The inclusion of either of these modifications could improve the outcome against both the “Fair reflection of costs” and “Reflect risks to future Government income” objectives, in particular as they should mitigate against the risk of future tax revenues being different to what is expected. However, recent experience has shown that such modifications would not score well against the “Stability” objective. Actual GDP experience has been particularly volatile in recent years, most notably during the period of the pandemic and the utility of reflecting this so directly in employer contributions to public service pension schemes should be considered very carefully.

    On balance, whilst there are a number of merits to both modifications which would be technically defensible, these approaches would introduce an extra layer of detail and complexity into the process, the merits of which may be unnecessary given the broader context of the objectives of the SCAPE methodology and the approach to financing unfunded public service pension schemes. Accordingly, I consider it reasonable to not allow for these modifications.

    I would note, however, that the effect of not allowing for these modifications is that experience variations are less visible and less easily quantified. Whilst employers are not exposed to the risk of underperformance of GDP, this risk is carried centrally by Government. This is an understandable position for Government, particularly given the economic circumstances experienced recently, but I suggest there would be benefits for HM Treasury to monitor how actual GDP compares with the assumed SCAPE discount rate over time and consider the extent to which any divergence should receive greater visibility.””

    I’ve resisted the temptation to highlight particular words, phrases and sentences. You can do that. However whilst “risk” has been clearly highlighted, I suggest “materiality” might be more challenging with only suggested self-monitoring.

    The 2020 actuarial valuation reports are expected before 2024, (signed by the new Government Actuary?) and the risk and materiality reporting requirements of actuarial standards TAS 100 V2 (effective from 1st July) be required.


    I’m awaiting a reply from the OBR as to why their July Fiscal Risks Report didn’t mention this £2tn index linked debt, SCAPE or the effect or implications of the change. The “R” of OBR is being challenged.





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