First, let’s get things straight in the FT’s thinking when it publishes

The UK corporate defined benefit market, valued at £1.1tn, according to the Pension Protection Fund (PPF), has seen a significant improvement in funding levels since 2019. This shift is largely thanks to rising gilt yields, which have bolstered projected investment returns.

It isn’t being invested in gilt yields that has created the surplus, it is that the notional deficit has been converted to a notional surplus.

The amount that is owed by the defined benefit pension schemes is just the same and what is left after the great sell-off at the end of 2022 is not covering those future payments what covered the payments when the assets were still in the possession of the schemes.

We may be as wrong about the surpluses as we were about the deficits, led by the nose by those who value future payment of pensions by the yield of gilts  could determine the surplus has gone when the cost of lending to the Government goes down. To use the famous word of Keating and Clacher, these surpluses are  “Ephemeral”

The choices that companies can take.

I rather like Alan Livsey’s laying out of choices to corporate boards

These surpluses represent a pool of capital that could be returned to shareholders, used to increase benefits for pensioners or controlled by insurance companies following pension scheme buyouts.

Once you’ve got over that these surpluses are ephemeral, you can make the best of a bad job and work out who you would most like to donate money to. Do you want shareholders to have the money they needlessly paid as deficit contributions? Do you want members (and other staff members who are working but not in the luxury workplace pension)? Or do you want to donate the money to insurance companies, or more likely to the American finance houses who now own most of them?

I won’t go into the morality of this. There is a fourth option which is to take a long term view and use the surplus as a buffer against future hard times. Easy come means easy go to people grounded in common sense.

If you follow the thinking of John Hamilton and a group like him, you see the opportunity for DB schemes to take a long term view and invest for growth rather than prepare for an end game. Yesterday I was with Ashok Gupta discussing how pension superfunds can help smaller DB schemes that cannot afford to stay open- partly because of operational costs – to join pension schemes doing what insurance companies do , but with an eye to growing member’s assets.

Do the TAS 300 analysis that Will McGrath suggests you do and you will see the numbers for the options laid out by the FT and a fourth, an option to run the pension scheme on for the members as was promised.

The volatility between deficits and surplus is immense and it’s all down to accounting. The discount rate dictates everything not the money that is paid us in our pension payments from corporate plans. Soon perhaps we’ll recognise we have no more reason to feel now-our surplus puts us in the money  than we felt when five years ago our pensions were deep in deficit.