With unusual rapidity we have got the video of Bobby Riddaway ready for sharing and here it is.

There is much to enjoy in this excellent presentation and the superb questions from fellow experts. I kept a low profile as I sold a lot of with-profits around the turn of the century and suspect much of it lurks in personal pensions, occupational pensions and in life policies beyond the transparency of unit-linked policies and yet to be tackled by organisations looking to simplify people’s affairs in retirement. There are issues for those who run the dashboard and Bobby’s presentation could only provide us with high-level views of how with-profits will work its way through the system.

It is important to recognise that with-profits and CDC are different animals and if you want an actuarial explanation of how benefits from the two are distributed, spend time with Bobby. Of critical importance is that CDC does not (in the UK) run buffers held back to meet bad times and it does not make promises about the future. Critically with-profits makes promises which are baked into the “policies” and reserved for.

We must remember that there is no attempt to protect the member of a DC plan from the volatility of the markets now that with-profits has been withdrawn as an investment option. With-profits did not creep under the charge bar introduced to auto-enrolment by Steve Webb, the lack of transparency of with-profits went with the new world of workplace pensions in the years following 2012.

The failure of insurers to properly recognise the costs they were incurring in selling with-profits (most particularly the Equitable Life) are explored in this session. The collapse of that life company resulted from guarantees built into policies that could not be met when interest rate (and gilt yields) fell around the end of the last century.

We will look back at with-profits as one of several failures of those promising and reserving on the short-term market conditions that made such practices reasonable. We saw a similar mess in the LDI crisis in 2022 and will continue to suffer huge long-term losses if we continue to sell our defined benefit books to the insurers as trustees and employers are doing.

Thanks to Bobby and those who ask the questions. This information is important to policy makers as a salutary lesson on how not to do things and as a reminder to those who want to see consolidation at all costs. The cost of consolidation cannot mean a loss to those with with-profit promises of the value they bring.

Two faced appearance

The sharp inspectors of the screenshot above will see me appearing at one time with two faces. This is a result of failures of local streaming, I am not two faced.