This website is entirely my own creation and has nothing to do with any former employers. Not only do I accept all responsibility but also I assert all rights over the site's content. The views expressed are entirely personal and not endorsed by the UK actuarial profession, at least not yet, and my work has not been peer reviewed. Thanks are due to those who have discussed the issues… and to those who have refused to engage. Family and friends have been supportive, for which I remain grateful.

In the past, I have refrained from criticising either scheme actuaries or the pensions regulator, suggesting that the problem is just the framework within which they are forced to operate. However, I now believe that, together, the actuaries and the pensions regulator are responsible for having invented and then presided over a morass of regulations which don’t work. One of the factors that changed my mind was the manner in which the 2022 LDI debacle was greeted, as if there was no problem.

Some pages may appear repetitive but I don't know which route you'll take. Several pages have little content - deliberately. Although I have removed the symbol, all amounts are in sterling. Nothing on this website constitutes “advice”.

Although this website has a lot in common with “smoothfunding”, this one is rather simpler.  There, over 10 years ago, I started trying to deal with defined benefit pensions (which I updated in July 2024) whereas I am now only dealing with really simple contracts where the payments are certain. My basic question is why we think we can get complex stuff right if we can't get the basics correct - which I regret I rather doubt. We need much more balance between short term and long term views.

Typically, any financial entity's assets and liabilities are periodic cashflows over time, short or long; capital values are only poor representations of those cashflows. Consistency between future cashflows in both directions should be sought. However convenient it may have been in the past to represent them by scalar values, that approach conceals far more than is revealed. Given the enormous computing power now readily available, there is no good reason to retain scalars instead of using stochastic projections, so allowing stakeholders a more direct choice of risk appetite.

However, as scalars are still required by the regulators, at least in UK DB pension space, this website starts by considering how to derive “discount rates” as sensibly as we can. We will need to deal with some terminology and background. We can then move on to the contracts considered, the other variables taken into account and pricing approaches, following which we can look at outcomes, shown as dynamic  charts (now all in HTML5 rather than in Flash).

Recently, there has been a move to allow surplus refunds in order to “drive UK economic growth”. Frankly, I wonder how far TPR will be willing to allow ”surpluses” to be paid to sponsors. Were I still a pension scheme trustee, which ceased many years ago, I’d be demanding that the sponsor produce robustly based ALM information at the sponsor’s expense. How brave will trustees actually be? We last had pension surplus refunds permitted between 1987 and 2004 and Inland Revenue were advised that many requests had been very poorly backed up; maybe this time will be better.

Ultimately, I am driven to the conclusion that actuaries should stop using discount rates alone for long-term projects with specified intended outcomes because cashflows are the key elements and scalars alone are inappropriate. As mentioned above, if we can't even do simple stuff, can we really solve complex problems?


Jon  29 May 2025