Scheme sponsors were first granted contributions tax relief in 1921. Prior to the 1960s, many schemes were insured, with a switch to direct investment via managed funds during the 1960s, when there was a huge increase in pension scheme numbers. From 1978, many more final salary pension schemes were set up in order to deal with “contracting-out” under the Social Security Pensions Act 1975.

Members had relatively short past service, to be financed over a long period and benefit guarantees were not significant. With much higher prevailing interest rates than during the last 15 years or so, annuities (current and deferred) were not seen as expensive, with the wind-up position normally not a severe problem. Corporate pension accounting standards were far less stringent than under FRS17.

The main funding target was the contribution rate, for which smoothing was welcomed by employers and trustees. As well as the liabilities, the assets were also smoothed, the main influence being the 1961 Heywood & Lander paper but Puckridge had previously suggested smoothing the asset values as early as 1947. As a concept, smoothing the assets was restricted to the UK alone and nowhere else, especially not the US.

Later on, benefit guarantees became increasingly significant, with preservation revaluation extended in 1985, cash equivalent transfer rights becoming guaranteed in 1986 and guaranteed post-retirement pension increases being introduced in 1997. Dividend tax relief was partially reduced in 1993 and removed in 1997. Guarantees are very onerous for private sector entities and are hardly understood by most people.

More stringent corporate pension accounting standards were introduced, with FRS17 published in 2000, followed by IAS19. The early 2000s saw an equity markets plunge, with UK actuaries advocating a switch to taking assets at market value, which US actuaries had long been using as standard. Using an off-market approach had been aimed at long-term funding rather than being designed to fund earlier wind-ups. Hence, wind-up failure was an unfair original criticism.