With a £15bn surplus, PPF should not be stingy to pensioners short-changed since 2002.

Posted on September 1, 2026 by henry tapper

The following article talks of  the steelworkers of ASW which went bust before we had a PPF and whose pension scheme never properly paid out to them.   This is their complaint published in “nation cymru“.

It is time that money built up in the hard times should be spent in the good times. Our Pension Protection Fund has got the capacity behind proper increases to those who have been shortchanged for more than a quarter of a century.

What is happening in January is a start but it should not be the end for those like John Benson ageing as they are.

Steelworkers robbed of their pensions say UK Government help falls short

02 Aug 2026
Pension campaigner John Benson

Martin Shipton

The UK Government has claimed that retired steelworkers who have campaigned for nearly 25 years to get their full pensions restored are better off as a result of recent changes.

But representatives of the pensioners say they will continue their battle for full compensation.

When Cardiff firm Allied Steel and Wire (ASW) ceased trading in 2002, the workers initially believed their full pension entitlements would be honoured.

But that turned out not to be the case, and they are still campaigning for all their pensions to be fully indexed to inflation – a concession that successive governments have not been prepared to make.

The campaigners have now written to new Welsh Secretary Stephen Kinnock asking him to finally deliver them justice.

Many other pensioners whose employers went bust have also been disadvantaged, although they have been partially compensated through membership of the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS).

“We understand the impact that this has had on members and we have strengthened the safety net that the pension compensation system offers, so that it works harder for members following their employer’s insolvency.

“Legislation in the Pension Schemes Act 2026 introduces increases on Financial Assistance Scheme payments based on pensions built up before 6 April 1997 which will ensure AWS workers are eligible for an uplift.”

According to the DWP, this step change going forward will make a meaningful difference to over 300,000 PPF and FAS members, with average uplift of around £80 in the first year, and some pensioners seeing an increase of up to £340 more.

“The PPF is responsible for implementing these increases for its members, and for FAS members.

“We expect that the legislation will be brought into force in time for the first pre-1997 increases to be made to most members from January 2027.

“Increases will be CPI-linked (capped at 2.5%) and apply prospectively (ie to payments going forward) for members whose former schemes provided for these increases.”

A Wales Office spokesperson said:

“The Secretary of State has received the letter and will respond in due course.”

‘Safeguards’

Prominent ASW campaigner John Benson responded:

“What Labour are not telling the country regarding our appalling pension miscarriage of justice is that this was of successive UK governments’ own making. There was a failure to put in place safeguards after the Robert Maxwell Daily Mirror pension scandal [which came to light after Maxwell’s death in 1991 and showed that he had looted £460m from the Mirror’s pension fund] and Gordon Brown’s unfair tax on occupational pensions between 1997 to 2010 [which netted £238bn for the Treasury]. These indefensible actions destroyed the finest occupational pension system in Western Europe.

“Days before the general election in 1983, Stephen Kinnock’s father Neil Kinnock gave a speech in Bridgend in which he warned: ‘If Margaret Thatcher is re-elected on Thursday … I warn you not to grow old.

Now the former workforce at ASW Cardiff and all those innocent victims in the FAS are telling the country not to grow old under a Labour government if you have an occupational pension.”

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Welcome to autumn! It’s back to work and workable weather.

Posted on September 1, 2026 by henry tapper

This is the 15th September I’ve been writing my blog and my last that I will credit myself a legitimate worker. I will be 65 in a couple of years which was when people used to be retired , get a carriage clock and a shake of hands from the boss and the prospect of a wage for life for doing nothing.

But it didn’t work out , how I was taught as a schoolkid or student. We are living longer so we have to work longer but work has become less onerous. My computer lets me start early, work later and fill the middle of my day with exercise or debauchery (depending on your preference). I am amazed how many people read my posts before 6 am. Yesterday, a bank holiday, I had a meeting with someone for whom it was 5 am when we spoke. We congratulated each other, he me for working on banking on a bank holiday, him for working at what used to be an ungodly hour (God worked 9-5 when I started).

Today, my area’s weather forecast is 0% rain and a reasonable temperature. Sun in the morning , cloud in the afternoon, autumn is like summer. Summer was like being in Spain when I was growing up. The weather wasn’t very workable and we started taking siestas in my house with a return to work later in the day.

Early in the summer we put artificial rain through a hose onto our miniscule lawn but then the drought was declared. The grass turned brown, the river Thames virtually stopped and what we had was held in by a weir which held water back so boats could have draft.

Today is the first day of autumn , the first day of work and a return to some kind or normality after 6 weeks of children’s and their parent’s holidays.

For me August was the first month that we can get our CDC authorised , a month that started with the hangover of Nick Cave playing madly on the Pension Regulator’s doorstep.

 

Nothing much has changed. The DWP has got a new Director of Private Pensions who issued a remarkable statement which made my holiday.

What of September?

Keats got the tone right, writing at the end of his short life.

Where are the songs of Spring? Ay, where are they?
Think not of them, thou hast thy music too,—
While barred clouds bloom the soft-dying day,
And touch the stubble-plains with rosy hue;
Then in a wailful choir, the small gnats mourn
Among the river sallows, borne aloft
Or sinking as the light wind lives or dies;
And full-grown lambs loud bleat from hilly bourn;
Hedge-crickets sing; and now with treble soft
The redbreast whistles from a garden-croft,
And gathering swallows twitter in the skies.

For many of us, autumn presages the end of their year ; I’m sure there are many who would like my days challenging the institution to be in an autumn too. But I am stronger and more determined than for many years as my vision for pensions comes alive

This autumn it will be two years since I nearly lost my life and two years since I made a lucky recovery. I “have my music too” and this blog has become a place where people my age and older who are still working can vocalise their memories and make predictions based on experience.

The maturity of autumn is upon us, as Keats explained in one amazing sentence

Season of mists and mellow fruitfulness,
Close bosom-friend of the maturing sun;
Conspiring with him how to load and bless
With fruit the vines that round the thatch-eaves run;
To bend with apples the mossed cottage-trees,
And fill all fruit with ripeness to the core;
To swell the gourd, and plump the hazel shells
With a sweet kernel; to set budding more,
And still more, later flowers for the bees,
Until they think warm days will never cease,
For Summer has o’er-brimmed their clammy cell.

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“Does CDC fit with the Government’s priorities?” Mr Boulding politely answers “yes”

Posted on September 1, 2026 by henry tapper

 

 

My friend and soon to be my competitor as CDC Proprietor, here’s Adrian Boulding. Brilliant as usual on Andy Burnham

It’s been an exciting time for politics, with a new Prime Minister arriving at Downing Street, several new faces in Cabinet and a slew of policy announcements. Myself and others have long campaigned for CDC pensions believing that they deliver not just expected higher outcomes but a range of good things for society too.

But how does CDC fit with a new Government? To answer this question I’ve been scanning all the usual news sources for what priorities Andy Burnham has declared in his first few days, and then asking whether CDC pensions can help him to resolve the challenges he has laid down for his new Government.

These are the top five declared priorities that I have found:

1.    Housing.

“End rough sleeping” was Burnham’s first instruction as went through the door of No 10. “And we will build more Council Homes” he declared in his first speech.

The policy is the opposite of Thatcherism, where more people were encouraged to own their home, and it will lead to more people renting, and over time more pensioners renting in retirement.

The lifelong income that CDC provides, targeted to keep pace with inflation, is a great match for a pensioner that needs to pay rent throughout their retirement. It avoids the risk of poverty in later retirement that is very present for those in other forms of retirement income where a disproportionately high share of the real value of the retirement income may be consumed in the early years leading to rents becoming unaffordable from a diminishing income in later years.

2.    Cost of Living

Burnham told his first Cabinet that he wants to lead a “cost of living Government”. This doesn’t seem to be about CPI, which at 2.6% sits comfortably within the Bank of England’s target range of 1% to 3%. Rather it’s about the sheer unaffordability of everyday life for many, with Joseph Rowntree Foundation reporting that 7.4million low income UK households could not afford at least one essential item like food and heating in the last 6 months. The uncomfortable choice of go hungry or go cold.

With the Pensions Commission addressing adequacy of retirement incomes, some are clamouring for an increase to the statutory minimum AE contributions. CDC, which delivers expected retirement incomes around 30% or more higher than DC, could be the solution that means unaffordable contribution increases imposed on low income households simply aren’t necessary to solve adequacy.

3.    Defence

Some of us go to watch air shows for pleasure, but when Andy Burnham spent part of his second day as Prime Minister at the Farnham International Air Show it was to have the right background behind his third policy priority. Much like you or I might choose a carefully curated background behind us for a critically important Teams or Zoom call.

“We are going to honour our commitments on defence” he declared. And we have all noted how the former Defence Secretary John Healey who resigned from Sir Keir Starmer’s Government over his criticism of inadequate money being found for Defence has now been made Chancellor.

We can expect new ships, new missiles, the first autonomous fighter aircraft to follow. Our kit will be more high-tech and more built in Britain or Europe than our current dependence on America. But these things take a long time to design and build – often ten years plus.

The long term investment horizon of a CDC scheme means that CDC could provide the finance to build the next generation of defence capabilities. In ways and quantities rather greater than  either DB or DC could.

4.    Getting more young people into work.

Today over one million 16 to 24 year olds are not in education, employment or training.

That’s 13% of young people classed as “NEETs”, a rate that’s three times that of the Netherlands and clearly out of kilter with most European countries. I find the term NEET somewhat pejorative as it almost implies that a sofa-surfing benefits-fuelled existence is their lifestyle choice. Only don’t try saying that to a school or university graduate who has submitted over 100 job applications without success, and often without even a response as the few employers with jobs are overwhelmed by applications.

DC has been criticised for investing such a high proportion of assets overseas. Although it’s trying to do better, with the Mansion House commitment and the Cushon-Eversheds opinion on investing to build better infrastructure. Yet actual progress towards weaning DC schemes off their fix of overseas allocations that reduce the cost of capital for US businesses has been painfully slow.

CDC, where the pressure will be much less about historical short term investment returns and much more about the Actuary’s best estimate of long term future returns  feels better placed to invest in ways that will create British jobs going forwards.

5.    Make politics more collaborative

The new Prime Minister wants to take power out of No 10 and carry it to every postcode in the land so they can do more.

I’m still wondering quite what this means, but I see it as a bit like Thatcherism yet a bit different. The Iron Lady wanted to take power out of central Government and give it to individuals. Each and everyone one of us could have our own Personal Pension. If we didn’t like our employer’s AVC scheme, we could save In our own Free Standing AVC scheme. Yet Burnham doesn’t refer to passing power down to individuals but to every postcode, a little collective. (I sit at the end of a row of 14 houses that share the same postcode, and yes we do do things collectively, like a Royal Jubilee tea party or celebrating a resident’s 80th birthday.)

CDC being a collective enterprise maybe we will find new ways for people to collaborate, new groupings that bring workforces together with a common goal of better meeting the needs of retirees through shared endeavour. The mooted aim for a CDC for social care workers could be a great example of care providers working in harmony rather than in competition with each other. And do more for a very hard pressed group of very hard workers than central Government could do sat in No 10.

Conclusion

I give a resounding “yes” to the rhetorical question about whether CDC fits with the new Government’s priorities. Because CDC can provide the support and the framework for Government to make progress on Housing, on Cost of Living, on Defence, on NEETS and moving power out of No10 and into new collectives.

If I was sat around the Cabinet table I’d be advocating CDC because it really can help with so many Government priorities. Normally life is like a plate of spaghetti, and if you pull the end of one strand, something you didn’t want to move over the other side of your plate does! Our Regulator is going to make us set out a balanced description of all the upsides and downsides of CDC, but I struggle to identify any genuine downsides.

I had a momentarily distressing thought while writing this article that maybe Andy Burnham had never heard of CDC pensions. It was quickly dispelled by a valued colleague who pointed out how closely Andy Burnham, as Mayor of Manchester, had been involved in the creation of Manchester’s Bee Network of yellow buses. Following on from its success at Royal Mail, CDC was considered as the pension scheme for Manchester bus drivers, but the multi-employer version of CDC didn’t come online at the time.

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Oh no! We’ve got Kwasi and Liz Truss’ biggest fan promoted to shadow Chancellor.

Posted on September 1, 2026 by henry tapper

What is going on in the Conservative party?  They’ve gone and kicked out Mel Stride who is the last decent politician in an indecent party. Stride who Guy Opperman was pension minister to , throughout his time as SOS to the DWP.

Stride – a west country man like David Penhaligon.  I liked David though he died in 1986 and thought of Stride as the man Penhaligon could have been.

That they are running at 20% in the polls doesn’t suggest that they have the support to be an opposition party. That job is being done by the Reform Party who have Andrew Griffiths as their puppet shadow chancellor.

He’s not gone to Reform I hear you ask?

I’m sorry but while some Reform figures had seen Griffith as a potential defector because of his right wing views, he has stayed loyal to the Tory party.

The only thing that Kemi Badenoch can do to win back her supporters who’ve deserted is to give us a Reform style Chancellor. Griffith is a former senior executive at Sky and former chair of Just Eat. He received about £17mn as part of Sky’s acquisition by Comcast. Griffiths got a Farage style bung and has a cushy seat with a 12,000 majority in Arundel, so no worries for him then.

Griffiths would be (almost) the worst Chancellor’

Oh – I’m sorry, he’s the second worst Chancellor  you could ever have from one of our two historically major parties .The worst is no longer with the Conservatives but he lives in their memory like an ill-kept toilet

Andrew Griffiths was Liz Truss and Kwasi Kwarteng’s biggest fan. Kwarteng was sacked as Chancellor by Truss on 14 October after 38 days in post. This made him the second shortest-serving Chancellor, I’d be happy to see his shame being shared by Griffith.

Eat your heart out Richard Tice, the Conservatives already one of you and there’s not much you can do about it.

As a junior Treasury minister under Truss, he repeatedly defended the ill-fated 2022 “mini” Budget, blaming the ensuing market turmoil on global factors.

Griffith helped deliver the Truss mini-Budget that sent mortgages soaring and the economy into turmoil.

There is no way he should have been allowed to be considered for  a job at the Treasury again – ever.

I am sorry for my Tory friends.

I have members of my family who have conservative views, I have Tom McPhail who’s a Conservative champion.  I feel deeply sorry for them having to defend having Andrew Griffiths as economic spokesperson.

I could just about understand how Tom tolerated the pandering Helen Whately who should put Tom McPhail in the House of Lords so she can have him as her shadow pensions minister. Tom can lend her some respectability as the shadow secretary of state for the Department of Work and Pensions.

But no one can lend our shadow chief finance officer for this country such respect. Unlike DWP’s welfare office , where decisions are all passed to the Treasury, the buck stops at Number 11 – not that Andrew Griffiths has much chance of getting there.

I can live with Whately in her current seat as moaner in chief at pensions and welfare. But Griffiths is another matter – his promotion is a sign of a party in economic despair, that thinks we have forgotten of October 2022.

Anyone who thinks Griffiths  a worthy opposition to the present Chancellor , needs some help.

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The Bear, the Podcast and the Blog

Posted on August 31, 2026 by henry tapper

Thanks to Private Eye for reminding us all that those who can’t write, blog and those who can’t blog- podcast!

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A German retirement saving system moves from insurance to investment

Posted on August 31, 2026 by henry tapper

 

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TPR has done well to get rid of non-performing DC trust boards

Posted on August 31, 2026 by henry tapper

I wrote this blog, early in 2013 when the idea of a multi-employer trust was still new and opposition to it strong. The Pensions Minister then (Steve Webb) was considering bringing in a charge cap to drive out rogue providers and ineffective trustees

You have sat too long for any good you have been doing

Thirteen years on, it reminds me of the steps that were taken by DC master trusts to raise the standards within all our DC plans, including many large occupational schemes (such as Whitbread’s) where members were paying way over any reasonable amount for investment and administration services.

As we come to the end of a hot summer and start what I hope will be a productive second half to 2026, this is a reminder of how far we’ve come. We have a long way to go and CDC and the Pensions Act will together take us a lot further towards true Value for Money , but we should look back with a little pride that we saw through what we had in mind!

The standards of governance have improved to a point where members are well protected in DC accumulation, to finish the job, the second half has to be played. We need to help people to a wage in retirement not just the pension pot!

cromwell

The original of this blog can be found here

You have sat too long…non-performing DC trust boards should go

The biggest threat to workplace pensions in this country is political. The next election will be fought on a growth agenda and every Government department (other than the DWP) will be taking a long hard look at the employer duties surrounding the staging and management of auto-enrolment.

As Whitbread recently confirmed, the costs of meeting these duties can be higher than the contributions made into staff pension pots!

So the DWP have to concentrate on reducing employer costs and this they are doing by encouraging multi-employer schemes – mastertrusts and GPPs and insisting that AE can be implemented without advice. Placed in the context of a growth agenda, this country cannot afford to waste money on pensions infrastructure.

Writing in this week’s Pension Week, Ruth Bamforth , a barrister at law firm Gordons makes a compelling argument for improving the governance of workplace pension plans and especially contract based plans

As more individuals are auto-enrolled into contract-based schemes, member expectations are likely to increase, and schemes will come under more scrutiny with the introduction of pot-follows-member.

Ruth holds up the occupational pension trust structure as the exemplar of good governance but those of us who have sat on them, advised them or sold to them know that with regards DC, trustee knowledge and understanding is little better than that of members.

As Cromwell said, so might we..

You have sat too long for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go!

Ruth is pragmatic in her article in stating that there is no appetite amongst most employers to get involved in pension scheme governance. This is why the NAPF’s Pension Quality Mark so misjudges “what makes for quality”. Employers do want good pensions but they want the governance to be done at a multi-employer level.

There is no reason why a GPP cannot at a multi-employer level, replicate the quality of governance of a multi-employer trust. No reason why L&G’s GPP cannot look after its member interests as effectively as NEST.

So what is lost by collapsing all the small trust boards into a few large mastertrusts? Well purists will argue that employer specific structures bring with them benefits

Differentiation from competitors that can bring competitive advantage in the recruitment and retention of good staff.

  • Employer specific default investment options
  • Bespoke communications
  • Tailored HR and Payroll interfaces

But when you look in practice at the behaviour of staff, you have to ask

  • Do staff choose jobs on the quality of the workplace pension scheme (unless of course it’s DB)?
  • Has any employer successfully argued that their investment default is aligned to their membership demographics?
  • Does anyone read member communications?
  • Is there really any differentiation between DC providers administrative support services?
  • Frankly the answer to these four questions is NO. The competitive advantage of a pension scheme relates to money in (contributions) and money out (charges).

Employers do of course see value in getting a good investment default, providing excellent at retirement options and financial education to staff but they will only be rewarded for selecting a provider with these capabilities over time.

The employer’s job is to generate profit which generates jobs and the capacity to contribute to pensions. The employer’s job is not to manage the pension scheme or sponsor its own trustee board to do so.

Until recently, providers were afraid to step on the toes of advisers and offer the kind of governance that Ruth Bamford is demanding. Master trusts were seen as pariahs that “dumbed down” the work of single employer trusts and did advisers out of a job.

ALL THIS HAS CHANGED.

The withdrawal of the majority of pension advisers from advising on pensions has left the employer scheme (other than for the largest employers) HIGH AND DRY!

The coup de grace for the small pension scheme will be the introduction of the charge cap on the default investment option. Small occupational schemes and employer tailored GPPs will simply be too expensive to fit under the cap- especially if advisory fees are being paid from the member charge.

The combination of increasing pressure on charges, the withdrawal of advisers and member pressure for better schemes will require a consolidation of the 58,000 occupational DC plans in the UK around a handful of mastertrusts and GPPs.

These few GPPs and Master trusts will become centres of DC governance excellence.

Ruth Bamforth finishes her article by asking whether the introduction of mandatory governance might be a “sledgehammer to crack a nut”. I agree.

But it may suit the Government to regulate on it. I can see no easier way to clear out the non-performing pension trust boards of Britain, than to require them to raise their game!

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“Investors must back Britain or lose their tax breaks”, says James Ashton

Posted on August 31, 2026 by henry tapper

This is an article by Daily Mail business writer Ruth Sutherland about James Ashton and hit take on investment in the UK – pension investment in particular.  It come a couple of months before the budget and I hope is influential in directing investment into quoted British companies. Thanks to James and Ruth for this, you can read the original here.

James Ashton

James Ashton, champion of the UK’s small stock market companies, has a message for Andy Burnham and his Chancellor John Healey: we need to start investing in ourselves.

In particular, we need to stop selling off our companies at bargain-basement prices to overseas and private equity buyers.

And he wants UK pension funds to put more of the nation’s retirement savings into backing businesses right here, instead of channelling most of our nest eggs into foreign assets.

Ashton, 51, is coming to the end of a four-year stint as chief executive of the Quoted Companies Alliance (QCA), which represents small and medium-sized companies listed on the London stock market.

These firms, he argues, are hugely important for national prosperity and we fail to appreciate their worth at our peril.

He is concerned that so many companies have been snapped up by predators, including easyJet, testing group Intertek, energy marketing company DCC, Tate & Lyle sweeteners, outsourcing firm Mitie, and Teesside-based pawnbroker Ramsdens.

James Ashton is concerned that firms like easyJet are being snapped up by predators

‘In this summer of takeovers it is really important to remember that a share quote is an anchor in the UK for jobs, for intellectual property and for tax,’ he says.

‘Look at Ramsdens. It is not in the business of AI or any of the things we are meant to get excited about. But it is a company that came to market around 10 years ago and it has grown, opened stores and hired more people.

‘Then suddenly investors in Texas decide this company is worth at least 50 per cent more than anybody in the UK could comprehend and so it now is going to go to the US. I just don’t understand how that company is better run from Fort Worth in Texas than it is from Middlesbrough.’

This is a critical question for Healey, he says, adding:

‘In the Budget I would like the Chancellor to look into the question: why don’t we invest in ourselves? And why do we undervalue our own companies?

‘Every month I have been in this job we have seen a reduction in the number of companies trading shares in London. That is 45 consecutive months of decline.

‘Private equity and overseas buyers are picking off UK companies because they are going incredibly cheap, because we aren’t backing ourselves, because we have too much money under the mattress and because our pension funds are busy building world-leading companies abroad. We need to change that.’

None of this is for want of trying on Ashton’s part. A former journalist, whose previous jobs included a stint at the Daily Mail, he has been an energetic and effective head of the QCA.

He is expected to move on to a new role soon, probably running another industry body.

He advocates making the tax relief pension funds enjoy conditional on their investing in the UK, saying:

‘We offer tens of billions of pounds of tax relief to pension funds with no strings attached.  Other countries incentivise investment in their economies. Everybody else is wise to this”.’

Pension trustees, he says, often interpret their duty to act in the best interest of scheme members as meaning aiming for the highest returns, even if they are overseas.

‘But,’ he says, ‘what is also in the best interest of a retiree is a road not full of potholes, schools that are not closed and high quality jobs for their grandchildren.

‘It is about the sort of country we want to live in. This is why I am hopeful for John Healey as Chancellor.

‘He was defence minister so he knows what it is to invest for national security and resilience. This is in the same vein. We want to build companies in all industries. I would like to see a real focus on that in the Budget.

If you want good growth in every postcode, you have to do this. It is about being more positive about being British. Britain has to bring that pension money back home.’

James Ashton is chief executive of the Quoted Companies Alliance

Ashton has pushed campaigns to bring down the costs and regulatory burden on smaller listed companies. These include calls for the scrapping of stamp duty on share dealing in the UK, for which the Mail is also campaigning.

He is also lobbying for reforms to audit regulation and governance that will reduce the burden on smaller companies, which he argues is disproportionate compared with larger ones.

Another bugbear is the ever-expanding annual report, which now averages 98,000 words long. He says:

‘No government is going to win votes by saying we are shaking up the audit market, but that doesn’t mean it shouldn’t be done.’

Ashton points to semiconductor and chip design company ARM as the type of business the London stock market would ideally never have lost. He has even written a book about the company – The Everything Blueprint: The Microchip Design that Changed the World – published in 2023.

Founded in Cambridge, this hugely valuable business was a constituent of the FTSE 100 index and had a dual listing in New York.

It was taken over by Japanese conglomerate SoftBank in 2016 in a £24billion deal, taken private then re-floated on Nasdaq in the US three years ago. ARM’s market capitalisation is £191billion and if it were listed here it would be the second most valuable company on the FTSE 100 after HSBC.

Ashton says:

‘ARM was a big watershed. But, from a positive point of view, it was on the London market for 18 years, it still has the best part of 4,000 staff in Cambridge and it still calls Cambridge its world headquarters.’

As well as his role at the QCA, Ashton is an independent director at Finsbury Growth & Income Trust, run by respected investor Nick Train.

Despite a good long-term record, the trust has struggled in the past five years and the investment trust sector as a whole is under siege from US predator Boaz Weinstein and his vehicle Saba.

‘With investment trusts, of course there are challenges, but they are another of London’s unique assets,’ says Ashton.

‘On Finsbury we like to think Nick has assembled a portfolio of companies that are world-beating in their field, such as Relx, Games Workshop and Unilever.

‘Why doesn’t that story cut through? It is about how we all talk about Britain’s prospects.

‘It may be something in the British psyche. But the best investment has got to be close to home.

‘If a company is really present and visible in your community, why shouldn’t you buy shares?’

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Flawed Approaches to Asset Allocation include 60;40 – Going back in time with Thomas Aubrey

Posted on August 31, 2026 by henry tapper

Should the 60-40 ratio be changed, or should Gilt exposure be reconsidered altogether?

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— Henry Tapper (@henrytapper.bsky.social) August 30, 2026 at 6:07 AM

The 60:40 asset allocation has always been a bad strategy as has buy and hold. More here! lipperalpha.refinitiv.com/2022/06/pens…

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— Thomas Aubrey (@thomasaubreycca.bsky.social) August 30, 2026 at 7:28 AM

Pension Fund Deficits and Flawed Approaches to Asset Allocation – June 2022

by Thomas Aubrey.

Making the right asset allocation decision is critical if pension funds are to generate sufficient returns to meet their liabilities. A recent analysis by GlobalSWF indicates that US public pension funds are only 75% funded and face a $1.3 trillion shortfall. Other public pension plans, such as the Universities Superannuation Scheme (USS) in the UK, are also suffering shortfalls. Figures from the latter’s last annual report indicates it is only 84% funded. This shortfall has created a challenge for USS, which subsequently presented scenarios requiring an increase in employee/employer contributions from just over 30% to between 42% and 56%. This issue has triggered a series of strikes by academics across the UK.

The challenge for pension fund trustees is that the typical approach to asset allocation is unlikely to help them much. Grounded in the capital asset pricing model, the traditional method assumes an economy operates around its equilibrium level over time. Hence, the expected rate of return can be explained by the market’s historic performance, with differences in future returns understood as representing deviations from equilibrium. Attempting to manage the volatility of returns over the business cycle has resulted in most funds holding a mix of equities and bonds. The equity portion helps generate upside, while bonds, which are assumed to be uncorrelated, provide some positive return when equities are performing poorly.

Embracing balanced asset allocation strategies, however, requires accepting that around half of deployed assets will constantly be underperforming. This is not a great strategy if a fund’s liabilities significantly exceed the current value of its assets.

The Global SWF data shows that Public Pension Fund asset allocation is pretty static through time, with a mix of 41% equity and 44% bonds in 2016 moving to 42% equity and 39% bonds by 2021 (and with a range of other assets making up the difference). In general, equities performed well in these years but bonds did not, hence about 40% of the portfolio underperformed.

As argued previously here, the typical approach to asset allocation is flawed on two counts. First, an analysis of returns data indicates that equity performance is by far the most important driver of pension fund returns. Second, equity returns are affected by the credit cycle, which can be measured by the change in the Wicksellian Differential. Hence, the challenge for asset allocators should be to allocate capital to equities when the relative difference between the return on capital (natural rate of interest) and the money rate of interest is increasing, and to move out of equities when returns on capital decline relative to the money rate of interest. Such an approach enables investors to avoid periodic capital losses when equity values drop, while also enabling them to allocate capital to outperforming assets rather than underperforming ones.

The results of this approach, since the publication of quarterly notes from 2014 (based, in turn, on my 2006 model that formed the basis of Profiting from Monetary Policy), has been significant outperformance compared to buy and hold strategies for equities, bonds, balanced funds as well as 60:40 equity/bond portfolios. Crucially, this higher return comes with lower volatility, as measured by the coefficient of variation. The data excludes trading costs, although since 2014 there have only been 9 signals that have resulted in switching between different low-cost ETFs.

Exhibit 1: Comparison of returns and volatility by strategy since 2014

Last quarter, the signal indicated a move out of the broader US stock market into US energy equities, given the rising inflationary outlook and the expectation of losses from bond investments. The latest quarterly signal for the US market is negative for equities, with near-term profit expectations falling and the BBB cost of funding rising. Hence it can be expected that the Wicksellian Differential will begin to decline.

Exhibit 2: Outlook for US Wicksellian Differential

While this declining level of profitability is likely to have a negative impact on capital values, the overall economic outlook has a number of positive factors. First, US consumers are increasing their leverage, indicating that in spite of the decline in real earnings, demand is unlikely to stall dramatically. This leverage is supported by the fact that interest rates remain at relatively low levels. Indeed, bond yields (by credit category) appear to be stabilizing at the levels they reached at the end of 2018, which should be seen as a positive sign.

Exhibit 3: US bond yields by credit rating

Second, the latest credit transition matrices from Credit Benchmark for North American corporates do not indicate a deteriorating credit environment. On the contrary, sub-investment grade obligors are still seeing a higher ratio of upgrades to downgrades than was witnessed in the 2018-19 period. Furthermore, although investment grade obligors are seeing more downgrades than upgrades, these are at a lower levels than seen 2018 2019.

Exhibit 4: North American Corporates – Credit Transitions

One key question bond investors are trying to answer is whether long term bond yields have stabilized, based on the view that inflation will trend down towards 3%.  One signal indicating a downward trend is that nominal wage growth appears to have slowed a little in April. However, if inflation remains sticky at around 5%, then the Federal Reserve is likely to continue raising rates. Such a scenario may well result in a flattening of the yield curve, rather than a scenario where long-term yields rise in conjunction with short term rates. Hence longer maturity bonds, along with certain elements of credit, are more likely to sustain capital values.

As the Wicksellian Differential declines, the risk increases that equity values will fall, impacting funds that have large exposures to equities. Conversely, as inflation begins to drift downwards, investors in long maturity bonds might experience relatively higher returns than to equities. This is why consistently maintaining around half of a pension portfolio’s assets invested in something that is underperforming is unlikely to solve the challenges posed by the underfunding of pension plans. Investors need to abandon the premise of general equilibrium and instead examine the fluctuations of the credit cycle. This can provide a clearer picture of the expected rise and fall of capital values. Until pension fund trustees do this, their ability to maintain pensioner wellbeing remains a major challenge.

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The Johnson & Johnson Surplus Was Not Built by Good Management Alone

Posted on August 31, 2026 by henry tapper

Published by J&J Pensioners Network  |  June 2026

How twelve years of benefit erosion helped create the fund that Johnson & Johnson may now want back

In short: The scheme holds a £484 million surplus — and a member whose pension is built entirely on pre-1997 service has lost almost 40% of its real value since 2014. That is not a coincidence. The same twelve years that saw no increase on pre-1997 pensions, and below-inflation increases on the rest, are the twelve years that built the surplus Johnson & Johnson may now be able to access under new pension legislation. This article sets out, with the scheme’s own figures, why the surplus and the erosion are two sides of the same story — and what should happen before any of it leaves the fund.

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.

A £10,000 pension in 2014 is worth £6,000 in real terms today if built entirely on pre-1997 service.

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.

Notes on the £484 million figure: The 11,684 figure is the Plan’s total membership as at 31 March 2025 (Annual Report and Accounts). ‘Nil’ refers to employer contributions toward benefit funding; the FY2024 accounts record a separate £1.5m administrative/PPF-levy reimbursement. The Mercer actuarial report also notes the Virgin Media v NTL Pension Trustees ruling: historic scheme amendments lacking actuarial confirmation under section 37 of the Pensions Act 1995 may be void. The £484m figure is provisional until the Plan completes the retrospective s.37 confirmation process available under the Pension Schemes Act 2026.

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.

The mechanism exists. The surplus exists. The only thing missing is the company’s agreement to use one to address the other.

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.

Year Sept RPI Pre-97 increase Pre-97 value Post-97/pre-06 increase Post-97/pre-06 value Post-06 increase Post-06 value
2014 3.2% 0.0% 96.9% 3.2% 100.0% 2.5% (cap) 99.3%
2015 2.3% 0.0% 94.7% 2.3% 100.0% 2.3% 99.3%
2016 0.8% 0.0% 94.0% 0.8% 100.0% 0.8% 99.3%
2017 2.0% 0.0% 92.1% 2.0% 100.0% 2.0% 99.3%
2018 3.9% 0.0% 88.7% 3.9% 100.0% 2.5% (cap) 98.0%
2019 3.3% 0.0% 85.8% 3.3% 100.0% 2.5% (cap) 97.2%
2020 2.4% 0.0% 83.8% 2.4% 100.0% 2.4% 97.2%
2021 1.1% 0.0% 82.9% 1.1% 100.0% 1.1% 97.2%
2022 4.9% 0.0% 79.0% 4.9% 100.0% 2.5% (cap) 95.0%
2023 12.6% 0.0% 70.2% 5.0% (cap) 93.3% 2.5% (cap) 86.5%
2024 8.9% 0.0% 64.5% 5.0% (cap) 89.9% 2.5% (cap) 81.4%
2025 2.7% 0.0% 62.8% 2.7% 89.9% 2.5% (cap) 81.2%
2026 4.5% 0.0% 60.0% 4.5% 89.9% 2.5% (cap) 79.6%
Total loss 2014–2026 66.6% — 40.0% — 10.1% — 20.4%

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.

References

  1. Johnson & Johnson, Our Credo, jnj.com/our-credo. Written by Robert Wood Johnson, 1943; described by the company as “more than just a moral compass.”

This article is published by the J&J Pensioners Network (the public-facing name of The J&J UK Pensioners Voluntary Association) and is based on verified RPI data, official Plan documents and publicly available compensation disclosures. This does not constitute financial, legal or actuarial advice.

The Association welcomes correction of any factual inaccuracy in writing to info@jnjpensioners.org.uk. © The J&J UK Pensions Voluntary Association, June 2026.

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