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!

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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.

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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)

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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)!