Nausicaa Delfas, TPR CEO
This is the summary of what TPR’s CEO , Nausicaa Delfas said at the
Her speech at the Association of Consulting Actuaries’ 75th anniversary Chair’s dinner
You can read the text of the speech here.
A purely DC savings system would have made actuaries redundant
I do agree with her about the importance of actuaries to DB and CDC and to a lesser extent DC.
I say lesser because I agree with Nausicaa that
Too many people are still on a path to outcomes that fall short – not because they have done the wrong thing, but because the system around them has not yet caught up with the scale of the challenge.
And for many, it has not been clear what to do when they come to retire, often losing value at that point.
Which is why I have called our current pensions system “unfinished business”.
To me, DC is only a money purchase saving scheme, the purchase being an annuity that will return with Regular Income Pathways that end up buying the saver an annuity.
I know that the design of an annuity needs actuaries, but the DC scheme is a savings scheme not a pension and has a lesser need for actuaries. DC would eventually have made pension actuaries redundant!
The full system is CDC which doesn’t make actuaries redundant!
I will pass by her statements on DB which are important but to bring the past to life. I am thinking of the future which appears to me CDC
Then there is collective defined contribution (CDC) – perhaps the most exciting development of all.
CDC challenges the idea that pension provision must sit at one of two poles: full individual risk in DC, or full employer guarantee in DB.
Instead, it offers a collective, risk‑sharing model that has the potential to deliver better, more stable outcomes for members.
But CDC will only succeed if it is designed, governed and communicated well.
And that is where you come in.
CDC relies on sophisticated modelling, prudent assumptions, transparent adjustment mechanisms and strong governance. It requires careful balancing of fairness between generations, clarity about risk-sharing, and ongoing monitoring.
More broadly, CDC invites the profession to engage in system design, not just scheme design.
It is an opportunity for you to help shape a new chapter in UK pensions.
Here I will take issue with Nausicaa Delfas, at least in her use of “prudent assumptions” in the delivery of CDC.
Here is what actuaries tell me..
Quite simply the LAW says it should be on a central estimate basis. There seems a real danger of mission (and legality) creep. This seems to be a big problem of the creation of a Regulator alongside a reduction at the main department. And an industry with a history of getting its vested interests satisfied. .
Prudent assumptions lead to defensive investment strategies and would take CDC down the path that DB took and DC will take as it lifestyles towards annuity purchase.
What is prudent for closed schemes is not prudent for open DB and CDC schemes
We think that though “prudent” is flexible, we had best not mix up actuarial prudence up twixt open and closed schemes.
DC and closed DB are finite products with a finite investment horizon. This means that prudence is quite different than what happens with closed schemes (and savings schemes targeting becoming an annuity)
CDC isn’t in an endgame where prudence stifles growth
What CDC cannot revert to is the prudent assumptions of a closed scheme. If it assumes that it will have an endgame that will take it to the lockdown that private DB and DC are in today.
I know that this will be taken the wrong way because we consider “prudence” to be good in all things, but it is not what made Britain great. What made us great was growth which often meant us taking decisions which could not be called prudent!
If we invest in CDC it must be with the expectation that we will see more volatility in the short term but greater returns in the long term. You may not like the assumptions that made the DWP claim that CDC could increase pensions by up to 60% on the outcomes of DC but the DWP did and to do it they did not use prudent assumptions!
Many of my actuarial friends hate that 60% because it says that CDC will not sit in an end game but adopt an infinite investment horizon. That might be actuarial speech but to me as an ordinary Joe , that means investing more aggressively and making assumptions about success that you can only do with confidence.
The Pensions Regulator must be confident enough not to make prudent assumptions about CDC. We need good governance but not prudence (in an actuarial sense)!
This anniversary speech reads to me less like a balanced assessment of a profession and more like just a ceremonial endorsement that quietly sidesteps the profession’s mixed record to date.
A missed opportunity.
The praise is not just generous—it’s structurally insulated from evidence.
The speech opens by contrasting a “simple” past with a “complex” present, implying that rising longevity and system complexity justify the continued centrality of actuarial judgements.
That framing is convenient.
It avoids asking whether actuarial models and advice contributed to the very challenges now described—most notably:
In DB, underestimation of longevity improvements, procyclical funding approaches, and liability-driven investment strategies that amplified systemic fragility (as seen in the 2022 gilts crisis).
In DC, a design heavily shaped by actuarial and policy consensus that prioritised participation over adequacy, resulting in contribution rates and lifecycle investment strategies that are widely acknowledged to be insufficient.
By attributing today’s problems to external change rather than professional limitations, the speech pre-emptively absolves the profession.
Phrases like “trusted guides,” “strategic advisers,” and “your advice is critical” are repeated as axioms, not as defended claims.
There is no attempt to test these assertions against outcomes.
If actuaries are indeed central to decision-making, then the persistent inadequacy of retirement incomes and the self-destruction of many DB schemes should prompt scrutiny of their advice, not just celebration of their role.
The only nod to system failure—“outcomes that fall short”—is carefully depersonalised.
Responsibility is assigned to “the system” rather than to the actors (which must include actuaries) who designed, regulated, and advised within it.
There’s an implicit circularity in a regulator praising the very experts it relies on.
The line about moving to “expert to expert engagement with you” is telling: it suggests a closed epistemic loop where actuaries both shape and validate the framework within which pensions operate.
That surely risks reinforcing groupthink rather than challenging it.
The call for actuaries to “help us raise standards” further blurs the line between a regulator and the regulated.
It positions the profession not as an object of oversight, but as TPR’s partner in defining what “good” looks like—despite that partnership’s very mixed historical performance.
The role of professional advisers such as actuaries is to provide specialised expertise, sound advice, and proactive challenge to help clients make informed decisions and manage risks and opportunities. Simply parroting regulatory guidance on behalf of a regulator falls far short of my own expectations of professional
advice.
The lack of clarity in recent TAS 300 reporting to trustees and employers is just one example of where we need to understand far better what actuaries are saying behind closed doors.
The sections of the speech on DB, DC, and CDC reframe longstanding issues as opportunities for actuarial expansion:
DB’s very troubled history becomes a “more hopeful” phase, with little acknowledgement of how previous funding and investment advice contributed to unnecessary scheme closures and serious misallocations of employers’ capital resources.
DC’s weaknesses—especially at decumulation—are presented as a new frontier for actuarial input, rather than a gap that actuarial thinking has helped leave unaddressed.
CDC is cast as an exciting new design space, again positioning actuaries as architects of the future without reflecting further on the lessons to be learned from past design failures.
In each case, the profession’s remit grows, but its accountability does not.
The speech consistently uses passive or collective language—“the system has not yet caught up,” “change is possible,” “we can finish the job.”
This diffuses responsibility across an abstract “we,” masking the influence of specific actors and ideas.
It also creates a narrative of inevitable progress, in which my critique may feel almost churlish.
A genuinely balanced address might have included:
Acknowledgement of past forecasting errors (e.g. longevity, investment opportunities) and their consequences.
Reflection on the role of actuarial advice in shaping low DC contribution defaults and outcomes.
Recognition of systemic risks introduced by widely recommended, and hence adopted, strategies like LDI, particularly leveraged LDI.
A clearer distinction between where actuarial expertise adds value and where it has fallen short.
Without these counterbalances, the speech functions just as yet more professional affirmation rather than as serious reflection.
It’s a classic “anniversary” speech: cohesive, optimistic, and politically smooth.
But analytically, it’s thin.
It elevates a profession’s importance while treating its very mixed track record as mere background noise.
For a pensions sector grappling with adequacy, and trust, that lack of self-critique is not just a rhetorical gap—it’s very much part of an ongoing problem.