Our good friend Peter Cameron Brown will be speaking on Tuesday at Pension PlayPen’s Coffee Morning. He’s kindly attached his thoughts by way of introduction!
“Innovations in DB Pensions – Shared Ambition 23 Years On”
I will describe how 25 years ago one small company took the decision to buck the then trend of switching their pension promise to DC contributions and ran on a fully open accrual basis a Final Salary DB Scheme in deficit with an innovative average salary shared ambition benefit structure. This Scheme was influential in the establishment of the Royal Mail CDC Scheme and also in the discussions on Conditional Indexation in the USS.
Drawing from my previous experience as a CFO of a similar employer and then as Trustee Chair, I will explore issues such as trustee fiduciary duties, advisor relationships, distribution of surplus, misleading valuations, the relevance of various risks, the true cost of alternative end game strategies (including DC and CDC arrangements) and their impact on employers’ growth prospects.
I will set some challenge questions for the pensions industry.
Headlines of the results for this company and its employees over 23 tumultuous years for pensions, with the creation of TPR, the PPF and its levies, statutory deficit recovery contributions, the Global Financial Crisis, Quantitative Easing, LDI Crisis etc., were:
- Employer and Employee Contribution Rates unchanged between 2003 and 2025 at the rates that then applied in 2003, with the Employer Contribution rate reduced by 5% of Pensionable Pay from 2025
- The Pension Scheme Asset now represents over 70% of the total assets and reserves of the Company.
- A net pension scheme cost reported in the 2026 P&L A/c of 0.86% of total salaries and projected to be an income figure in 2027.
- The effective near elimination of all the usual pension scheme risks except long term future investment performance.
- Employees have continued to receive a defined “retirement wage” pension benefit since 2003 with the realistic prospect of it continued to be provided into the future. Retirement benefits guaranteed by the Scheme (surplus), the Employer (reserves), and the PPF.
- Benefits accrued from 2003 to the 31st March 2023 revalued by 30.68% for those drawing their pension after the 1st April 2026, compared with CPI inflation of 9.37% over the same period.
- Discretionary increases to Pensions in Payment reflecting RPI in recent years.
If you think DB is dead, perhaps you should think again!
Pension PlayPen invite
You are cordially invited to attend our next Coffee Morning when Playpen veteran Peter Cameron Brown will be speaking with us.