Long before the stock market fell out of bed three months into the new Millennium, lonely voices had pleaded that it was folly for a pension fund to stick most of its money in equities on the grounds that if you give them enough time they will beat all other investments.
If the equities delivered as advertised, the Inland Revenue virtually required the company to take back the resulting surplus in the fund, or at least award itself a long holiday from contributions. Few companies needed that encouragement.
But if, as happened with a vengeance in the new Millennium, equities fail to deliver, there is a mess. The balance of risk was skewed against the interests of the pensioners and future pensioners and often a bad deal for the company, too.
Surely, it would be better to invest the pension fund in a way that matches its future liabilities rather than going lickety-split for the maximum investment return with fingers crossed that nothing too dreadful will happen.
There was one catch. It had never been done. And when clever-clogs from the City came along to explain how they would set about it nobody understood a word they were saying.
Well, the first half of that is no longer the case. Last October, Britannic switched its £1 billion pension fund over to a liability-driven investment strategy. This is a mix of fixed-income investments, property and "swaps" - arcane long-term contracts issued by big banks supposedly covering the fund against the vagaries of interest rates and inflation - all devised to turn into a stream of ready cash just in time to pay the pensions due to the scheme's 10,900 members.
At its face value, that removes the risk for both the company and the pensioners. But taking this abstruse structure at its face value requires an act of faith. Even if Britannic's mathematicians and computer whizzes have forgotten nothing and done all the right sums, a financial swap is only as good as the counter-party at the losing end of the deal.
Britannic's Paul Thompson professes to be relaxed about that. Which is the greater risk, he asks, share prices crashing again, or the Royal Bank of Scotland going bust?
But even if the thing works perfectly, it is no good for the funds that need it most, those with crushing deficits. A switch into a liabilitymatching investment formula crystallises any surplus or deficit in the scheme.
For Britannic, with a £109 million surplus, that was the easy part of the decision. Many other companies would have to sign an unbearably painful cheque. n n n Would you ever have thought it? Alex Bannister, Nationwide's economist, is questioning the excellence of bricks and mortar as an investment. Gilts as well as shares, he calculates, have risen by a factor of six since 1985, while house prices have risen by 4.6 times.
That is good to know and not what is popularly supposed.
Still, to get that result you reinvest all the dividends and interest from financial investments - while you live in the house rent-free.