Meg Baynes’ piece in the Times which I featured on this blog is beginning to get some traction around the world
Astounding. I think because investment literacy is so low in the UK and saving-via-homebuying is so embedded, people don’t realize how much money has been effectively lost here – how many shorter, less comfortable retirements it means. Should be a scandal. https://t.co/gRY7Ja6GcB
— Mike Bird (@Birdyword) January 5, 2026
The simple facts astound this editor of the Economist in New York’s Wall Street.
Let’s remind ourselves of the article in the Times from Meg that got this started
There are people laughing at the simplicity of Meg Baynes as if she were a simpleton. Read my blog- she is no simpleton.Mike is no simpleton, Josh is no simpleton
Meg is pointing out what her generation ought to be astounded at, what Mike Bird is astounded and what the British pensions industry thinks is ok.
Because BA and BT and UISS and Shell (and to a degree Railways) are so de-risked that they cannot take advantage of the returns that everybody else have been enjoying in the past few years.
The truth is that being de-risked meant that money flew out the door in 2022, mostly in October 2022 when the LDI de-risking led to more than half a trillion being paid to banks for the borrowing of gilts. Since than DB plans have been in “surplus”, not because they have done anything right but because they have found what they should always have known if they’d looked at the #FABI index, that they were de-risking a deficit that didn’t exist
This graph was from the start of 2022 , it had looked pretty much the same since 2016 when First Actuarial started it , taken on a common-sensical basis, UK DB pensions weren’t under funded, they were in a position to meet their obligations (pay their pensions).
But having lost over half a trillion in the Budget triggered disaster of October 2022, the DB plans have gone into lockdown, investing very little into growth stocks and preparing for the end-game – a buy-out by US private market owned insurers and UK insurers dong their best to compete by working eye-watering bond strategies .
Instead of investing for the future, the large and small UK DB pension schemes have battened down the hatches and sat below deck.
There are of course DB schemes that want to get back on deck and set the sails right. Stagecoach have done it and there are schemes like UKAS and ABFoods who never de-risked , stayed on the deck and are now wondering how to spend surpluses,
It need not happen that DB pension schemes suffer the penury brought upon these mighty pensions quoted by Megan. They are in that position because of the wrong ideology introduced in the first decade of the century and overseen by TPR. First Actuarial’s #FABI issue turned out to be right, there was no need for LDI and LDI has led to the awful returns ever since the 2022 budgets for those who have stayed in low-risk investment strategies.
This of course need not be the way to run pension schemes. We do not need to throw pensions out the pram, we can still pay them, we can do so and invest in growth assets which will do a lot better over time than the strategies of the DB plans quoted. The way to do it is today called CDC though it looks very much like the DB we ran in the last century – by and large very well.
We do not have to have a DB pension system that is an embarrassment to us, which is laughed at on Wall Street and wept at by people in the UK who care for pensions.
DB ripped money out of the bank accounts of large employers when there was no need, when the real investment return needed to “breakeven” was what large DB pension schemes are achieving. Pensions should never have been declared in deficit, they weren’t and there were people from First Actuarial pointing this out.
Now these companies who dived into LDI are gloating they are in surplus while having lost a lot of money since 2020. It takes youngsters from the City and from Wall Street to point out what lunacy our DB investment strategy was and is.
Thanks Meg for pointing out the obvious with the fresh eyes of youth
