McPhail; “don’t rely on state pension if you’re young”.

Posted on February 20, 2026 by henry tapper

The state pension in its current form is unsustainable, both fiscally and politically. I don’t think it should be scrapped but its inexorable upward increase has to be curbed. Over time, its value should drop back and means-tested post retirement welfare should take up the slack: less universal benefits, more targeted. Tom McPhail on Linked in

Tom McPhail

I’m not scaremongering. A means-tested state pension is inevitable

We need to aim our limited welfare budget at those who genuinely need it

Given the increasingly dire state of the economy, a means-tested state pension might now be inevitable.

I’ve argued before in these pages that a possible solution could involve increasing the state pension age to 75, and it’s fair to say this met with some resistance. But would means-testing it be a better alternative?

If you are minded to dismiss this speculation as mere scaremongering, consider the facts. In 1970 there were roughly five workers paying into the tax system for every retired person. Today the ratio is three to one and by 2070 it is expected to be two to one. The state pension costs about £150 billion a year, an increase of about 60 per cent in the past ten years, driven by the generous triple lock as well as the demands of a growing pensioner population.

The state pension already accounts for more than 40 per cent of our welfare budget, according to the Office for Budget Responsibility (OBR), and its cost is expected to rise further. The OBR predicts that spending on the state pension will rise from about 5 per cent of GDP today to 7.7 per cent by the early 2070s. This is not sustainable.

Many pensioners absolutely need and rely on their state pension. We can’t let them down. Pensioner poverty is still a problem, particularly for older, single pensioners.

Pensioner affluence is a thing too though. I have seen first-hand many pensioners who enjoy, but who also absolutely do not need, the £10,000 to £15,000 a year that they get from the state. Many of today’s pensioners own their own home and enjoyed the benefits of working lives building up guaranteed pensions through the latter part of the 20th century.

Wealth taxes have been espoused by some populist agitators, but before we go down that road, maybe we should simply ask why we hand out triple-locked welfare payments to those who don’t need it?

The triple lock has increased the state pension by the higher of inflation, wage growth or 2.5 per cent each year since 2012. And this increasing cost comes against a backdrop of stagnant per capita economic growth, which has averaged less than 1 per cent a year over the past 25 years.

There has been much discussion in the news recently about the usurious cost of student debt, with the government charging interest rates that would make a mafia loan shark blush. Those same graduates now face an uncertain job market and impossibly high house prices: in what reality does it seem fair to keep taxing them to pay for today’s pensioners?

Our national debt is fast approaching 100 per cent of our annual economic output. The cost of servicing that debt is now more than £100 billion a year. We spend more on debt interest than we do on education, more than we spend on transport and defence combined. In only a handful of years over the last few decades has the government actually managed to reduce our debt. The default setting is to borrow, borrow, and borrow more every year. This too is unsustainable. The imperative for economic growth and reduced public spending demands hard choices of our politicians.

And how could means-testing the state pension work? We already have pension credit, a means-tested top up for pensioners on low incomes, which only costs about £6 billion a year. It could be possible to dispense with the triple lock and deliberately allow the state pension to fall back in real terms, while at the same time significantly increasing the generosity of pension credit. This would target our limited welfare budget towards those who genuinely need it.

Politically, this is fraught with danger, given pensioners’ electoral clout. But if not this, then what is the answer? A change to the system is essential and inevitable. Sooner or later some brave or unlucky politician is going to have to grasp this nettle. In the meantime, the younger you are, the less reliance I would advise you to place on the state to see you through retirement.
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Tending wanted growth, weeding where needed; the policy maker’s a gardener

Posted on February 20, 2026 by henry tapper

Policy-making as gardening

 

Policy-makers must be more like gardeners than mechanics says Chris Dillow

“Those who cannot remember the past are condemned to repeat it”

said George Santayana. Such has been the fate of Sir Keir Starmer, who recently said:

My experience as Prime Minister is of frustration that every time I go to pull a lever, there are a whole bunch of regulations, consultations and arm’s length bodies that mean the action from pulling the lever to delivery is longer than I think it ought to be, which is among the reasons I want to cut down on regulation generally and within Government.

He is not of course the first minister to discover this. The diaries of Tony Benn and Richard Crossman express frustration at the difficulty of getting things done. And in 1999 Tony Blair spoke of having “scars on my back” from trying to reform public services. Writing in 2008 David Richards, David Blunkett and Helen Mathers described (pdf) three decades of frustration with policy-making:

A minister might pull a policy lever only to discover later that it has not had the desired effect.

In believing that there are such levers politicians are following some defunct economist. In 1949 Bill Phillips built a machine which, he thought, represented the economy. Partly, it did; it showed the circular flow of income and it reminded us that the economy is not an act of nature but a creation of humankind – and what humans can create they can change. But partly it did not, as it omitted important things such as inequality, environmental degradation, supply shocks, growth and innovation.

Polly McKenzie draws an inference from all this – that the “levers of government” is an unhelpful dead metaphor:

The economy is not a thing but an aggregation of billions of decisions, each made on the basis of incentives, opportunities and desires…Government has tools, it’s just that they are not mechanically connected into that system like a lever is.

Giles Wilkes agrees:

All physical analogies for working on the economy are misleading and imply the sort of direct causality, measurability, clear categories and obvious relationships that barely ever applies.

They’re right.

But, but, but. As George Lakoff has shown, metaphorical thinking is ubiquitous. When we confront abstractions such as the economy, politics, nature, or moral questions, we use metaphors to try to make sense of them. Asking us to forego all metaphors is a counsel of perfection. Metaphors are like models (in fact, models are metaphors): all are wrong, but some are useful in some contexts.

On the basis that it takes a metaphor to kill a metaphor, but subject to that caveat, I’d suggest an alternative – to regard the economy and society not as a machine but as a garden.

For one thing, you do not make a garden just as you choose. You cannot simply impose a vision. What you grow depends upon the type of soil; how much sun you get; how long your growing season is; how much space you have and so on. You need to work with what you’ve got, not against it. It’s similar in policy-making. You need to work with and through civil servants, not merely rail against the “blob”. And you must remember Burke’s words:

Circumstances (which with some gentlemen pass for nothing) give in reality to every political principle its distinguishing colour, and discriminating effect. The circumstances are what render every civil and political scheme beneficial or noxious to mankind.

This was one way in which Truss went wrong. Fiscally expansionary tax cuts might have worked in a depression. But they didn’t when markets were worrying about inflation. The circumstances rendered her scheme noxious.

Truss is mad, but this government is guilty of something similar. The UK economy’s comparative advantage lies to a large degree in higher education and creative industries; these are some of our garden’s most succesful plants.

But the government is putting weedkiller onto these by taxing overseas students; allowing nibmys to close down music venues; making it harder for musicians to tour Europe; and allowing tech companies to steal writers’ work.

Meanwhile it is also trying to grow flowers that are not well-suited by subsiding steel and chemical industries, like trying to grow a mediterranean garden in north-facing clay soil.

“Cut your losers and run your winners”

applies in gardening as well as investing. The government seems not to realize this.

Both gardening and policy-making are forms of guided emergence. Societies are the product of human actions but not of human design, which is why the machine metaphor is at best only half-right. Similarly, gardeners cannot easily predict exactly how their garden will look because of course the weather (among other things) will intervene. What they can do is simply create the best chances for plants to thrive by feeding and watering them properly, and putting them in the right light and soil. So it is with governments. They can provide the right conditions for a thriving people and economy (to a much greater extent than it is actually doing so now) but they cannot guarantee that they will indeed thrive.

This is not to say that conditions are always a binding constraint. Gardeners prepare soil by mulching and composting, or improving the drainage of clay soils or by changing the acidity of the soil. Good politicians do something similar; they know that public opinion is not a fixed datum but is something malleable.

In Thinking the Unthinkable Richard Cockett describes how thinktanks such as the IEA and CPS spent years preparing the ideological ground for Thatcherism. And Thatcher herself did not immediately embark upon that project; it was not until her second term of office that she began serious privatization and attacks on the NUM. You must plant at the right time.

Her epigones, however, have not been so wise. Osborne and Cameron failed to cut the size of the state in part because they never made a serious ideological case for doing so or had a means of identifying genuine waste, instead hiding behind mindless drivel about the “nation’s credit card”. And Starmer did not devote enough effort in opposition to understanding just how effort much is needed to repair the economy and public services.

Some constraints are binding; the neighbour’s fence or the position of the sun. Others are not so much. Equally, politicians must know what’s a binding constraint and what isn’t.

A further parallel between gardening and politics is that in both, change takes time. All gardeners know the need for patience, if only because it can take years for plants to grow. The same is true of social change. Shifting tens of thousands of people from some jobs to others takes a long time. One of the right’s consistent errors has been to under-appreciate this. Just as it was wrong to think unemployed miners in the 80s would soon find new jobs, so it wrongly though that companies could quickly divert trade efforts from the EU to non-EU countries. But economies and people don’t work this way. Change takes time.

Which leads to another similarity between gardening and policy-making. Gardens are almost never perfect; there are always some plants that aren’t (yet) thriving. Similarly, there is, as Adam Smith said, “a great deal of ruin in a nation.” Which is inevitable, because there are trade-offs. Do you want a benefit system that errs on the side of generosity or meanness? Do you want efficient public services or ones that have some slack in them to respond to emergencies? Do you want a simple tax system with some inequities, or a more complicated one with deadweight costs?

Some things, therefore, we must just live with. In gardening, said Gertrude Jekyll, “one has not only to acquire a knowledge of what to do, but also to gain some wisdom in perceiving what it is well to let alone.” At this time of year, for example, it’s tempting to start weeding – and in doing so to dig up perennials by accident. Echoing her, the late John Cushnie would often tell listeners to Gardeners’ Question Time:

“it’s not worth the bother.”

Politicians, by contrast, rarely heed this, preferring, in Jaap Stam’s words, to be “busy cunts.”

There’s one more similarity. Gardening isn’t only about encouraging growth. We also need to destroy things – to kill weeds and pests; to prune branches; and even to cut out whole plants. Sometimes, we need a chainsaw.

The same is true of politics: you must not only cultivate client groups but also weaken or destroy opposing interests, as Thatcher, for example, attacked trades unions. Politics isn’t only about technocratic fixes, hawking product like market traders, and TV soundbites. It is about forming and weakening interest groups.

In this respect, Shakespeare knew more than we know today, our brains having been addled by moronic current affairs shows. In Richard II he has a gardener say of Richard:

O, what pity is it
That he had not so trimmed and dressed his land
As we this garden! We at time of year
Do wound the bark, the skin of our fruit trees,
Lest, being overproud in sap and blood,
With too much riches it confound itself.
Had he done so to great and growing men,
They might have lived to bear and he to taste
Their fruits of duty. Superfluous branches
We lop away, that bearing boughs may live.
Had he done so, himself had borne the crown,
Which waste of idle hours hath quite thrown down (Act 3 scene 4).

Bolingbroke spoke of  enemies as pests:

The caterpillars of the commonwealth,
Which I have sworn to weed and pluck away.

He had them killed. Like nature, politics is and has to be red in tooth and claw.

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Tribunal upholds bans and fines for reckless pension advisers and fund manager

Posted on February 19, 2026 by henry tapper

This is an announcement on 18th February by the FCA

The Upper Tribunal has upheld the FCA’s decisions to ban Stephen Joseph Burdett and James Paul Goodchild from working in financial services. 

Mr Burdett and Mr Goodchild previously held senior roles at Synergy Wealth Limited (Synergy) and Westbury Private Clients LLP (Westbury), respectively.

The FCA banned the pair from working in regulated financial services for recklessly exposing pension holders to unsuitable investments.

The Tribunal also found that it was appropriate for the FCA to impose penalties of £265,071 on Mr Burdett and £47,600 on Mr Goodchild.

Because of Mr Burdett, 232 personal pension funds worth over £10 million were switched into high-risk investment portfolios that were obviously unsuitable. The portfolios were created and managed by Mr Goodchild at Westbury, with around 38% of overall holdings linked to a single offshore property developer.

Despite his knowledge that the portfolios were high-risk, Mr Burdett allowed Synergy’s customers to receive reports indicating that their money would be placed in low or medium risk portfolios. Mr Goodchild included the misleading terms ‘cautious’ and ‘balanced‘ in the names of 2 of the 3 high-risk portfolios.

In addition, Mr Burdett acted as a director of Synergy despite knowing he did not have the required FCA approval to perform that function. He also failed to co-operate with the FCA’s investigation.

The FCA intervened in 2016 to protect consumers, stopping the pensions business of Synergy and Westbury. Both firms subsequently went into liquidation and were dissolved.

To date, the Financial Services Compensation Scheme (FSCS) has paid out over £1.4m to victims.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said:

‘People trusted Mr Burdett and Mr Goodchild with their hard-earned savings and were badly let down. The pair worked together to switch customers’ pensions into obviously unsuitable, high-risk investments.

‘They made significant personal profits from their actions. We will not tolerate such conduct and are pleased that the Tribunal agrees.’

The Tribunal noted that ‘Mr Burdett’s actions have shown little regard for the interests of Synergy’s clients, pension holders whose pensions were transferred to the Westbury SIPP and were invested in ways which Mr Burdett knew were obviously high risk and hopelessly inappropriate’.

In addition, the Tribunal found that

‘As an experienced and qualified investment manager, Mr Goodchild must have known of the risk of putting together for pension holders of varying risk appetites portfolios with any significant levels of concentration of investment into an obviously high risk project… He completely ignored this risk, without regard to the interests of the pension holders’.

The Tribunal was not satisfied that Mr Goodchild’s

‘cursory due diligence … was even remotely sufficient to constitute reasonable steps to ensure suitability.’

This follows an announcement on 19th January

The FCA’s decision to ban Darren Antony Reynolds from working in financial services and fine him £2,037,892 has been upheld by the Upper Tribunal.

The FCA’s decision to ban Darren Antony Reynolds from working in financial services and fine him £2,037,892 has been upheld by the Upper Tribunal.

Mr Reynolds was dishonest when he gave pension transfer advice and investment recommendations to his customers, causing them significant harm.

Mr Reynolds showed a clear disregard for his customers’ interests. He encouraged British Steel Pension Scheme members to transfer out of their defined benefit pension scheme, despite knowing that the advice was wholly unsuitable. He also advised his customers to invest in high-risk and unsuitable products while at the same time hiding high exit fees and falsifying documents.

Mr Reynolds’ misconduct exposed hundreds of people to serious financial loss. Over £17.6m has been paid in compensation to more than 470 affected customers, many of whom suffered losses in excess of statutory compensation limits.

In addition, Mr Reynolds let 2 unapproved people give pension advice, putting customers at risk. When confronted with his misconduct he lied to regulators, allowed important evidence to be destroyed, and moved his family home into a trust to avoid paying his debts.

Therese Chambers, joint executive director of Enforcement and Market Oversight at the FCA, said:

‘Mr Reynolds’ misconduct was the worst we saw out of all the British Steel Pension Scheme cases, and he caused untold damage to his clients. He acted in a way that was corrupt and dishonest, putting his own profits before people’s pensions and acting without integrity as he tried to cover his tracks.

‘He has spent many years trying to evade responsibility for his actions. The Tribunal’s full endorsement of our findings now brings those efforts to avoid accountability to an end. We will pursue recovery of the penalty to the fullest possible extent and will not hesitate to bankrupt him if necessary. We will ensure that he does not retain a single penny of his corrupt profits.’

The Tribunal noted that ‘Mr Reynolds is clearly guilty of dreadful misconduct over a protracted period, which had very serious adverse impacts on a large number of retail customers. He is, as the Authority alleged, a corrupt and dishonest man lacking integrity.’

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The risks to pension providers who issue contracts but provide no pension

Posted on February 19, 2026 by henry tapper

This post is profound and worrying – worrying because we are not addressing the concerns those in  personal pensions have when they get to taking their money,

We talk of contract based pensions as if they were comparable to trust based pensions but do we really understand the difference?

When we are simply building up a pot we may not worry if we are being looked after by a trustee but when we get to taking our money back , what does the contract say?

It is not enough to leave those with contracts on their own when they want their money, we need to help them as if they had trustees. We do not seem too concerned about contracts, Johan is.

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TPR must show “market oversight” that includes CDC!

Posted on February 19, 2026 by henry tapper

I am surprised and frankly disappointed to hear the mission statement of our new “Interim” Executive Director of Market Oversight.

Less than a year ago we were welcoming an interim to this job in Julian Lyne, now we have another and we are promised that at some point in the future we will have an executive (who sits on the Executive Board of TPR) who is there for the foreseeable.

What is Ben’s “market oversight”?

It is DB and DC, this despite there being a 130,000 CDC scheme under its regulation, nor that there is an authorisation of UMES whole of life CDC’s being launched by TPR at the end of July.

It really is time that TPR made its mind up both about its long term future for “market oversight” and its commitment to CDC.

I know Ben and he’s a decent bloke. He’s put in his time in commercial roles within the industry. But is this really what the UK is interested in from Pensions? This from the announcements put out to excite us a few days before we meet in Edinburgh.

With the current Pension Schemes Bill poised to transform the pensions sector, Ben will continue our transition to a more prudential-style of regulation as the pensions landscape consolidates towards fewer, larger schemes.

Professional Pensions delivers this , to welcome a new face to the Pensions Regulator Board

Gunnee is a senior institutional business leader with over 25 years’ experience in the pensions industry. He previously held several roles at Mercer over a 17-year period and was most recently head of global institutional sales and business development at Gresham House.

He replaces TPR’s current interim executive director Julian Lyne, who is taking on a new role with an investment management firm.

Alongside Gunnee’s appointment, the regulator has launched a recruitment process to appoint a permanent executive director of market oversight.

TPR chief executive Nausicaa Delfas said:

“I am delighted Ben is joining us as interim executive director of market oversight. His financial services expertise and market knowledge will be invaluable as we focus on the practical implementation of the pension reform agenda and deliver the best possible outcomes for savers.

“I would also like to thank Julian Lyne for his very positive contribution at TPR, and wish him all the best in his new role.”

Gunnee added:

“I am excited to be stepping into this role at one of the most important times for pensions. We have the opportunity to build a resilient and well-functioning defined contribution market, provide security for members of defined benefit schemes and drive stronger governance across private and public sector schemes. TPR’s role in bringing about these changes will be crucial.” 

There is no mention from Ben either. It is as if TPR has no interest in a product that the DWP has promoted with game-changing claims.

“Up to 60%” better pensions for ordinary people is the strap line for all DWP’s statement on the subject

So what are we to follow? Should we be looking for ways to get CDC schemes authorised and up and running by early 2027 or should we be focussing on DB and DC as we have these past quarter of a century?

DB, DC and CDC please. The market is moving on Ben and Nausicaa!

Footnote

It is worth clicking on the announcement on linked in and consider the use of social media in matters such as this

All ok then?

 

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Value for Money matters in housing as it does in pensions.

Posted on February 19, 2026 by henry tapper

There is a congruence between the FT and the Guardian about the financial impact of allowing value of leasehold is falling most dramatic in London but now all over Britain. This is a pension blog, but we must remember that housing is a cost but also an investment for both young and old. Here is Harry Scoffin.

There is an argument that Covid made the idea of living close to where you work irrelevant. Many people who previously worked 5 days in a fixed workplace may only do two or three and this attracts people  to bigger houses rather than smaller flats.

This is not a financial but a lifestyle factor but what Harry and the Free Leaseholders argue for is freedom from ground rents and pernicious charges by managing agents that they have no control over but which makes the cost of a flat much more than mortgage and council tax, a raft of extra costs are levied. These are not transparent, not monitored and most certainly not regulated.

Were leaseholders extra charges such as ground rent, to come under the FCA, you can be sure that their would be more than a £250 cap. There would be a question of “value for money” that would lead to the end of ground rents altogether. When it comes to ownership of assets, the parallels between the rights of a pensioner and those of a leaseholder starkly display the pensioner being protected while the leaseholder is exposed to a range of costs that would not detract from a pension payment.

It really is time that we recognised the issues around flat holding and recognise the rights of leasehold to value for their money.

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A glimmer of light on the gender and ethnicity pensions gap.

Posted on February 18, 2026 by henry tapper

Monty Hadadi needs no introduction , nor do the authors of the report he posts about; – Kim Gubler now of IGG, Smart Pension and LCP

View Muntazir Hadadi (FCA)’s profile

Link to the report: https://lcpuk.foleon.com/gender-ethnicity-pension-gap/gender-ethnicity-pension-gap-report-2026/

Home – A glimmer of light on the horizon

lcpuk.foleon.com

 

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Populism in the shape of Richard Tice knocks on the door of public sector pensions.

Posted on February 18, 2026 by henry tapper

Mary McDougall and Anna Goss have picked up for the FT on some outspoken statements from Reform on Public Sector Pensions

You can read an excellent article free here, or mail me for a link – henry@agewage.com

I mentioned in my post on he Church of England’s pension, that today was a noisy day for pensions. Richard Tice is as noisy about unfunded public pensions as John Ralfe is about funded private pensions.

Richard Tice is set against the OBR in a strong report 

Brought to the defence of taxpayer sponsored public sector pensions is Glyn Jenkins, an old friend of this blog and surely the longest serving pensions officer ever!

“There’s obviously a lot of political opportunism,”

said Glyn Jenkins, head of pensions at Unison, one of the UK’s largest trade unions.

“When a system changes and advisers are brought in, it can cost a lot of money to bring in an inferior scheme.”

I doubt a more succinct defence of public pensions has yet been made!

The point out why these unfunded schemes are such a political opportunity for Reform

You can also question what would happen if further tinkering was attempted, let alone the kind of changes to what are very much value for money ways for the Treasury to pay  deferred pay to our pensioners.

The City would like to fund these pensions but as Glyn Jenkins points out “it can cost a lot of money to bring in an inferior scheme“.

Changing the unfunded public sectors?

Rather than leave Richard Tice to his explosive statement, the article looks at a variety of alternatives that Tice could investigate.

There is a long section given to understanding which sections of the public sector are becoming more expensive to pension and which are getting paid out less in pensions than are accounting for  set aside to meet future bills. The article translates difficult sections of OPBR analysis into a readable illustration. This shows just how important funding the NHS section is (and why it is making good reading for the Treasury in terms of money in and out.

To suppose that changes can be made to a system of payments that is so integral to how public sector employees is paid, is naive. Carl Emmerson of the Institute of Fiscal Studies makes it clear that these pensions are deferred pay and cannot be treated like the pensions or savings plans in the private sector.

Most of the thinking on reorganising state pensions along private sector lines completely ignores the fundamental change with which public sector pensions interract with public sector pay

Policy Exchange, a right wing think-tank, has proposed putting those joining the public sector into DC schemes, with a total contribution rate of 15 per cent.

The savings would accrue after 14 years — to the tune of £19bn annually by year 30 according to the think-tank — although the estimates do not consider whether a pay rise for recruits would be needed to make the pension cut palatable.

Other options involve capping the benefits of DB schemes, similar to the Universities Superannuation Scheme, or introducing “notional” DC schemes earning government-set returns rather than market returns, as happens in Italy.

It is inevitable that as Reform increases the noise it can make in political circles, so it will get access to the areas of public sector policy that deals with public sector pensions. We have seen how much can be done quite quickly by a populist party in the USA.

I suspect that, despite the warnings in this article from Glyn Jenkins , Carl Emmerson and others, we have not heard the last of Richard Tice’s populist views on public sector pensions. Thanks to the FT for an excellent article.

 

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The CoE will restore clergy’s cut pensions with an £840m surplus – good news for most but not all!

Posted on February 18, 2026 by henry tapper

It is a noisy day for pensions in the FT today and nowhere noisy than in an article from John Ralfe about the Church of England’s pension fund.

The author, pension consultant John Ralfe is far from happy that the CoE is putting up the pensions of clergy (and other employees) in its Defined Benefit Pension Scheme.

The problem he has is with the calculation of the £840m surplus of the pension fund which he doesn’t agree with. He thinks it should be more like £300m using a gilts + 0.5% discount rate on liabilities rather than the more optimistic return used by the trustees (prompted by advisers who come in for some criticism for milking the scheme for fees).

The article also criticises the Scheme for using Repos for its gilt holdings which it points out are a more risky (because of leverage) way of getting exposure to gilts (a remembrance of LDI).

Here are the facts, laid out in the article and clearly leaked for whatever reason. CEFPS stands for the Church of England Funded Pension Scheme.

The CEFPS has 25,000 members including 11,000 pensioners, and £2.6bn of assets at December 2024. It is now finalising its 2024 three-year actuarial valuation, with the December 2023 update showing a healthy £840mn surplus.

This is a very long way from 2008 and 2011, when the Church cut the annual value of new pensions earned to manage costs and control the deficit. The definition of pensionable salary and the annual accrual rate were both cut, and the normal pension age was increased from 65 to 68.

The problem back in the first decade of the century was down to some bad investments in property (the church continues to hold freeholds much to the dismay of those who want a better life for the leaseholders).  But since then things have gone much better for the scheme and it was a big winner in 2022 with its scheme now showing a “whopping” surplus.(see above).

Rather than being super prudent and shunting the scheme assets into bonds, as John Ralfe did at one point with the Boots Scheme, the Scheme will continue (according to the article) to invest heavily in growth assets.

Here the language of the article becomes strong

The Church is still taking huge risks, holding 70 per cent of assets in equities, private equity, infrastructure and private loans, with an assumed return of gilts plus 3.5 per cent.

The 2025 Pension Protection Fund report shows the average pension holding in these assets is just 22 per cent, with the balance in bond-like assets to match pension liabilities — so the CEFPS is a real outlier.

Just why they can do so and use a 3% more aggressive assumption than the Pension Regulator’s  tombstone gilts + 0.5% isn’t explained and I hope that those closer to the Scheme and the quality of the CoE’s covenant will explain.

But the good news for clergy is that they will get back the pensions that originally were promised.

The Church is now so confident about pensions that the February meeting of the governing General Synod gave its final agreement to reverse most of the cuts, with many members seeing a big pension boost from April 2026.

For serving clergy, pensions earned since 2011 will increase by a whopping 61 per cent, according to the Church Times. For retired clergy serving after 2011, pensions earned since 2011 will be increased by about 38 per cent.

Like the mineworkers and their bosses, a radically growth strategy from the scheme has paid off and there will be many more than John Ralfe grinding their teeth. Ralfe calls the CoE’s pension fund asset strategy a gamble

the Church seems to be playing a dangerous game of double or quits, just like betting money at the casino. Would hard-pressed parishioners be happy if they knew what was going on with their donations?

There is of course a similarity between the behaviour of the CoE pension scheme and the strategies of 20m of us who rely on DC pension schemes to pay us in retirement. The only difference is that we have to DIY the pensions from our pots.

The article doesn’t state what the attitude of the CoE’s General Synod is towards its DB scheme, nor the DC scheme which is what is in place going forward (for the moment) nor what is happening with the Cash Balance defined benefits that it administers for affiliated employers.

What we wait for later in the year is the authorisation of a new CDC scheme that will simplify a very complex pension system. That it now has a DB  scheme in surplus there is no doubt, that members and not parishioners are getting the benefit of the surplus will be considered as good news for most who go to the Church and that it is taking steps to sort out the very topsy-turvy pension scheme is good news.

The CoE’s DB pension fund has declared an £840m surplus today , the result is good news and we can now hope that using CDC, the clergy’s retirement will be simpler and  more stable than it’s been so far this century.

It takes some doing to make a good news story gloomy, but this opinion piece in the FT gives it a good go!

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How do we ensure fairness in CDC schemes? – LCP’s younger generation speak up

Posted on February 18, 2026 by henry tapper

Partner Sean Garratt

This article appeared on LCP’s blog; you can read the original here.

Why fairness matters in CDC pension schemes

CDC schemes provide an income for life, at a level that is widely expected to be significantly higher than available from a DC scheme for a comparable spend.

As a result, CDC is expected to be very attractive to the significant cohorts of people who value an income for life in retirement with no complicated decisions to make on investments or when to take benefits and how much. This was covered in our Future of Pensions report.

However, any new pension arrangement needs to earn the trust of members and their employers. Some commentators have questioned the fairness of CDC schemes. This is an important consideration. We believe well-designed CDC schemes are both fair and maintain the other benefits of CDC.

In this blog, we discuss the issue of fairness in CDC and explain how the next generation of CDC schemes are being designed to ensure fairness.

What fairness means in CDC context?

Fairness means different things to different people.

A DC scheme is fair in the sense that a member has control over where their pension is invested and how to use their pot at retirement. The income a member receives in retirement is determined by the decisions they make, and there is no cross-subsidy between the DC pots of different members.

However, in practice only a small minority of savers make active decisions on how to invest their pot, with around 90% of DC members choosing the default investment option.

The highly individual nature of DC can lead to unfairness in a broader sense. Outcomes depend heavily on investment performance and economic conditions during key periods, such as the run up to retirement (when a pot will be at its largest), and if choosing drawdown, during the early years of retirement. These are largely outside members’ control.

This means that different generations of savers can experience different incomes in retirement, even if they made identical decisions. The risk sharing mechanism in CDC manages this to a greater extent.

By sharing risks between members, CDC schemes aim to provide more equitable outcomes over time.

Partner Helen Draper

LCP partner Helen Draper said: “CDC is new and evolving, and we are seeing innovative approaches being considered, including whether to compensate younger members for greater variability in potential outcomes. By sharing risks between members, CDC aims to deliver more equitable outcomes over time.”

Partner Sean Garratt added: “Risk transfer is inherent in CDC, but it is designed to support desirable outcomes: higher pensions, an income for life and no complex decision-making for members. Careful benefit design is key to avoiding unnecessary risk transfer between generations or demographic groups. We are optimistic that the coming wave of CDC schemes will achieve this and earn the trust of future members and their employers.”

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