It seems that we fear performance tables for DC schemes will lead to “risk aversion” as trustees choose not to invest but put member’s money “under the bed”. Professional Pensions seem to have tapped into the prevailing zeitgeist on “fiduciary duty”

Partner Steve Webb said: “The threat of effectively shutting down pension schemes whose investment returns are relatively poor runs the risk of causing the whole industry to become very risk averse.

“Sometimes it is necessary to take investment risk to achieve the best returns but those risks don’t always come good. The penalty for being an outlier will be so great that this new approach could rein in the top performers as well as challenging the under-performers.”

Jesus Christ warned against this “money under the bed” behaviour in the parable of the talents (or the parable of lost opportunity as I would like to re-Christen it).  Matthew 25 14-30

For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods. 

¹⁵ And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. 

¹⁶ Then he that had received the five talents went and traded with the same, and made them other five talents. 

¹⁷ And likewise he that had received two, he also gained other two. 

¹⁸ But he that had received one went and digged in the earth, and hid his lord’s money. 

¹⁹ After a long time the lord of those servants cometh, and reckoneth with them. 

²⁰ And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more. 

²¹ His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 

²² He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them. 

²³ His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 

²⁴ Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed: 

²⁵ and I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine. 

²⁶ His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: 

²⁷ thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. 

²⁸ Take therefore the talent from him, and give it unto him which hath ten talents. 

²⁹ For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. 

³⁰ And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.

I would not want any trustees to be cast into outer darkness, nor any regulator for that matter. The difficulty for any trustee is to avoid missing opportunities to do well as much as to avoid the pitfalls where members will do badly.

Trustees are expected to do their best in this (employ best endeavours) and they have to accept that in taking bold decisions , they risk both doing well and badly.

We have a system of “due diligence” on investments that should mean that trustees get better information on investments than ordinary savers. They have a wider opportunity set and they can call upon economies of scale to reduce the cost of buying and selling assets , whether directly or indirectly.

Nobody expects their money to be put under the mattress and we’d be disappointed if all that happened to it was that it was leant out to the exchanges to be returned with interest (usury). Bond markets are not investing in the thing itself (the real asset) they offer a derivative of the value of long-term investing (albeit with less short-term risk).

It seems to me that Jesus’ parable most exactly addresses many of the issues facing DC trustees today and provides some very straightforward insights into the dangers of sitting on other people’s money.

If your objective is simply not to get relegated , the chances are you will (see Sheffield United’s first half performance last night). If your intention is to do your best and you fail, then you can walk away with your head held high (compare Luton Town). If all pensions (like all football teams) seek only to “stay up”, then we should still have teams that are relegated – they should be lost to the Premier league of pensions under a “non-tryers” rule!

Such trustees deserve to be “cast into outer darkness”, they should be “gnashing their teeth”.