There is a version of events in which the £484 million surplus in the Johnson & Johnson U.K. Group Retirement Plan is simply the product of prudent investment and sound governance. Johnson & Johnson has paid nothing toward members’ benefits since the scheme closed to future accrual on 1 April 2023, so on that account the surplus has grown through good stewardship alone.

That version is incomplete.

The Ratchet That Nobody Mentioned

Since January 2014, every member’s purchasing power has been eroded, permanently, by two mechanisms: no discretionary increases on pre-1997 pension, and statutory inflation caps on pension built up after 1997.

The caps are not a protection — they are a ceiling. When inflation runs above the cap, members absorb the excess for good; there is no catch-up. In low-inflation years this makes little difference. In high-inflation years, of which there have been several since 2014, it acts as a ratchet, locking in a permanent real-terms loss that compounds every year. This affects every member, across every element of their pension, to varying degrees.

What the Numbers Show

Based on actual September RPI figures since 2014, applying the statutory caps and zero pre-1997 discretionary increases exactly as the scheme has operated — for a member who retired in 2014 with a £10,000 pension, by 2026:

• Pre-1997 element: worth 60.0p in the pound — a loss of 40.0% in real terms
• Post-1997/pre-2006 element: worth 89.9p in the pound — a loss of 10.1%
• Post-2006 element: worth 79.6p in the pound — a loss of 20.4%

These are not projections; they are the arithmetical result of applying published RPI figures year by year, exactly as the scheme has operated. The full calculation is in the Appendix, updated each October. Cumulative RPI since 2014 stands at 66.6% — pre-1997 members have received nothing toward that, not a penny, in twelve years.

The Pre-1997 Position

The Plan’s Statement of Funding Principles, signed 10 November 2023, confirms pre-1997 discretionary increases “may be increased from time to time… if the Company agrees to finance them,” and that no allowance has been included in the funding assumptions for providing them. The company last agreed to finance one in January 2014 — a periodic catch-up of 19.1%, the fourth in a series since April 2002, at 90% of cumulative CPI inflation from December 2006 to May 2013. The scheme was then in deficit; today it holds a £484 million surplus. Even on the periodic schedule that applied between 2002 and 2014, a further increase would have been due by 2017–2021 at the latest.

The Plan’s Scheme Funding Report confirms that 34.81% of pensioner liabilities relate to service before 6 April 1997 — roughly a third of the average pensioner’s benefit — has received no increase at all since January 2014. The mechanism to address this has existed for twelve years and has not been used.

This Is Not Just About What the Law Requires

Johnson & Johnson is correct that it is under no statutory obligation to provide discretionary increases on pre-1997 pension. The law does not require it, and the Association does not dispute that.

But the law also does not require a company to honour the spirit of the commitments its employees built their retirement around. It does not require a company to acknowledge that employees accepted pension accrual in lieu of higher salaries — and that the real value of that deferred pay has been quietly reduced, year after year, while the fund grew.

The J&J Credo, written by Robert Wood Johnson in 1943 and described by the company as “more than just a moral compass,” states: “We are responsible to our employees who work with us throughout the world. They must have a sense of security, fulfilment and purpose in their jobs. Compensation must be fair and adequate.”

The Association asks simply: is a pension that has lost 40% of its real value since 2014 fair and adequate compensation?

The Surplus and Who Built It

The scheme has a confirmed surplus of £484 million as at 31 March 2025 (133% funded) — approximately £41,400 for each of its 11,684 members. The employer has paid £nil toward members’ benefits since April 2023. The surplus has been built from investment returns on contributions made over decades, and from the compound effect of benefits that have not kept pace with inflation: every year a pre-1997 member received no increase, and every year post-1997 members received less than actual inflation, the scheme’s liabilities were correspondingly lower. The surplus is not simply a windfall from good governance — it is, in part, the accumulated arithmetic of twelve years of real-terms benefit reduction.

What the Association Is Asking

The Association is not asking the company to do something the law does not require. It is asking the company to consider whether the surplus it may now be able to access — under the new framework created by the Pension Schemes Act 2026 — was built, in part, at the expense of its members’ real retirement income.

If the answer is yes, then the appropriate response is not to distribute that surplus to the employer while pre-1997 members continue to receive an unindexed pension. The appropriate response is to address the disparity first.

Appendix: Pension Indexation and Purchasing Power Erosion, 2014–2026

All RPI figures are September readings (ONS series CHAW). The 2026 row is based on the September 2025 ONS figure of 4.5% — actual, not projected. This table will be updated each October.

Pre-1997: no statutory requirement; company discretion; last increase January 2014.   Post-1997/pre-2006: statutory LPI, capped at 5%/yr.   Post-2006: statutory LPI, capped at 2.5%/yr.

A Remaining Value of 60.0% means the pension buys 60.0% of what it bought in 2014. Figures rounded to one decimal place. Updated each October following publication of the September RPI figure by ONS.