This comment was fed into my mail yesterday evening by someone who’d watched the debate in the House of Lords about the choices facing trustees and employers with defined benefit pension plans they are responsible for.
Re the Lords and the Pension Bill
On the positive side it was cited that the decisions on the £1.2trn of DB Schemes are of national economic significance. TICK.
The Minister, also as justification for not accepting Ros Altmann amendments cited that both TPR and FRC were on the case and responsible for governance and the framework for endgame innovation. TICK
Also the majority of those commenting commenting on Ros Altmann’s amendments expressed a clear understanding that the insurers were gaming the system for their own financial advantage, with no thought of the impact on the member or the broad economy.
The game is on!
I include this on this blog as an encouragement to any reader to take out 45 minutes of their day and listen to this section of the debate on Monday night (19th Jan) From 18.05.48
https://t.co/fwTtAqPhMK https://t.co/b10yGptxYf
— Henry Tapper (@henryhtapper) January 21, 2026
This is what you should be watching
I go to lengths to promote this particular piece of the debate because , like my correspondent, I sense that Baroness Altmann has kicked off a game which will play for days , week and months until it becomes clear that an atrocity is happening to DB pensions as atrocious as the LDI calamity in its latter years.
This blog was not quiet between 2016 and October 2022 and it won’t be quiet about the shipping off of our pensions on a banana boat to Bermuda, to be paid (we hope) with guarantees overseen by the PRA but without surplus. The surplus that 75% of our private DB pension plans today, will be used to meet the extreme cost of guaranteed pensions and the healthy margins of bulk purchase annuity insurers.
There was a failure in the lead up to October 2022 budget and that failure is only now being recognised. Clacher, Keating and others had done the maths and explained that LDI at the extreme gearing that it reached was downright dangerous. The cost to our pension schemes of LDI was large and unnecessary .Though it has been justified by the lowering of liabilities by increases in discount rates that came with higher interest rates and gilt yields, the loss of a third of our DB assets to meet pay-back on leverage will not be justified.
Nor will the loss of surplus. This loss will be to insurers offering the chimera of gold plated risk-reduction.
There are other ways for DB plans to carry on
- By joining superfunds (not just bridges to buy-out) but those extending the pension schemes over the rest of this century
- By finding new sponsors with strong covenants keen to pay pensions (Aberdeen is the first)
- By paying the pensions as the original sponsors for as long as need be, recognising that DB pensions are an asset not a liability to sound businesses. I hope that great British companies like BP will look at what much smaller British organisations such as UKAS have done for the good of their pension and the sponsor.
What is most benefit is that the beneficiaries of pension scheme surpluses are paid to members and sponsors in a way that is agreed by all participating parties – trustees, unions members and regulators included.
In years to come we will look back at the words of my correspondent and recognise them an apt commentary on the 45 minutes of the discussion in the Grand Committee Room of the House of Lords.
the insurers were gaming the system for their own financial advantage, with no thought of the impact on the member or the broad economy.
