I would apologise  for embarrassing Peter Cameron-Brown, if I felt I was over-praising him.

But his comment on my blog in praise of what he stands for has not been taken down! Peter is a personal hero and his work is an example to other employers and/or their trustees. He cannot be a sly Scottish accountant and get away without being praised!

Here is Peter’s response

I must say I am rather embarrassed by the blog.

I do believe Hymans Robertson are correct to draw attention to the Current Open Scheme Cost of Accrual and contribution rate stability over the long term.

I also do not claim credit for the design of the particular scheme – that was Derek Benstead. All I have done is try to help steer it on a stable course through the troubled waters of the past 21 years.

The fundamental issue remains that current analyses shows that previous estimates were misleading and may have been overstating the cost of defined benefits. In reality you have got to look behind the assumptions on which the estimate is based and take the long term view.

If you are not familiar with my views on this you can look at my November 2024 blog articles: Should Pension Schemes Ditch Gilts  and Should Pension Schemes Ditch Gilts (part two)

Over the long term it is not just the use of gilts but the comparison to asset market values that has directed attention away from the fundamental issues of providing a defined or targeted future benefit.

What has been extremely damaging to pension provision in the UK has been the direction of attention to the worst case risk measure over the long term view. I do believe we need redirect the attention of our legislators and regulators to the long term – after all that is fundamental issue for all occupational pension arrangements.

I have been happy to explore these issue with Hymans Robertson over the past few months.

As Hymans say in the their newsletter:
“Currently only 4% of DB schemes are open to new members with a further 19% are open to future accrual. However, these schemes do offer a rare pocket of adequacy in UK pensions, compared to standard auto enrolment DC arrangements.

In March 2024, the Work and Pensions Select Committee concluded that DB pension schemes are still of critical importance to both UK savers and the UK economy. The Committee also warned that current regulations and policy caution, leading to a low-risk approach to investments could ‘finish off’ open DB schemes.”

My presentation was designed to help convince employers that they should look again at the real cost of providing a DB pension arrangement and that there were ways that cost can be predictable and controlled through changing economic and market conditions.

If Peter wants me to be critical it is here. He has been offering in his scheme a benefit less guaranteed than other DB schemes offered. By working out with Derek Benstead a scheme that could survive over time and then pay some, he got it right.

He allowed John Quinlivan in his webinar on Tuesday to point that out. At 1.07 in the presentation John accuses Peter for being “a little bit loosey goosey!” in getting to where he is now. But being right shows how Peter was more right!

The reality for Peter was to go a different rate to the same place and to do so by promising less and delivering the same. Frankly this is the kind of thinking we need to get back to a pensions system rather than a replication of 401K or Australian Super.

He achieved survival and now success by moving from a “not for profit” to a “with profit” approach where only the small element of guarantee was secured with non-performing assets while the majority of the payments he is now making to his members have been earned by investment.

Peter and John are at opposite ends of the conversation. It is a good conversation to be had. Do we want to guarantee and insure as John Quinlivan wishes or do we want to invest for the future with a “Shared Ambition Approach”.

We are now asking that question , whether the conversation at Pension PlayPen, at IFS when Nest turn up and argue for Shared Ambition and it’s the conversation PSH is having with those who regulate and legislate for pensions.

It is absolutely right that we have this conversation or we will leave the platform to the insurers who own defined contribution plans (from GPP to master trust with platforms for occupational DC to boot).

So Peter Cameron-Brown and I remain friends and Derek Benstead and John Quinlivan can have their different views as trenchant advisers. Let us have this conversation and if we cannot have it elsewhere, let us have it where we can!