Thinking back, I have realised that the seeds of this website go back to the late 1970s! At the time, private firms of consulting actuaries were offering investment performance services, based upon market movements over short periods. Many trustees felt they had to take account of the numbers they were being sold.

What struck me as bizarre was that this topic could then be immediately followed (or preceded) by a discussion of the results of the actuarial valuation. For the latter, at least back then, the actuary would have been emphasising that the assets were to be considered over the long-term, with short-term fluctuations being irrelevant.

As a simple example, suppose that two consecutive TWRs (market related time-weighted returns, the statistic normally published) are 20% pa and (10% pa), respectively. Ignoring compounding, the average return is 5% pa. The first year's statistic was a very poor indicator of what was to come and so positively misleading. The essential point is that DB pension fund trustees normally had a very much longer planning timeframe than other investors.

That led me to think about basing performance assessment upon discounted asset values, now recorded at long equity returns (most recently updated in Jan 2024). It is worth thinking about UK DB funding in the past, reflecting that higher returns really do reduce costs and worrying about the huge private sector “funding nightmare”.