Hard-pressed pension schemes in the UK can be forgiven for concluding that there is nothing less certain than death and taxes.

Back in 1997, they were knocked off balance by the decision of chancellor Gordon Brown to remove the tax relief they enjoyed on dividends. More recently, David Norgrove, chairman of the Pensions Regulator, warned that schemes could be woefully underestimating the longevity of pensioners. Schemes are being called to account as never before. Contribution holidays, such as those enjoyed by sponsors in the 1980s and 1990s, are a thing of the past. Benefit cuts are being forced through. Pension scheme failings in the investment arena are noteworthy. Paul Myners, chairman of hedge fund specialist Ermitage, recently remarked that trustees are "inherently cautious people" who spend little time on investment. Trustees accept that they were too exposed to equities ahead of the recent bear market. Diversification is taking place, but only at a slow pace. Only a limited number of Britain's largest schemes are sufficiently well governed to emerge from the current crisis unscathed. The Audit Commission has said that local authority schemes in London could be merged into a single entity to achieve efficiencies. According to a recent Pensions Regulator survey: "Larger schemes have emerged as more active and more confident in their self-assessment." Many sponsors will be seeking to offload their pension liabilities through a phased programme of disposals to third parties in the years ahead. A series of buyout operations have crept out of the woodwork. All of them will be seeking a return by getting a better grip on mortality levels than schemes have done in the past. Investment banks will play their part in immunising schemes. Consultants will still have a role to play but their influence is on the wane. Research firm Blacket recently cast doubt on the reliability of their advisory skills. The problems afflicting the UK final salary movement have been building up for decades. They are rooted in the complacency which developed when they were immature and contributions were way in excess of the size of prospective pension payments. In the absence of a generous state pension, employers wanted to take advantage of tax relief on savings to set up collective schemes. By default, the activities of schemes became governed by trust law, designed to cope with the needs of families and charities rather than large institutions. Required levels of accountability and disclosure were minimal. Schemes could hide their mistakes behind the sheer volume of money flooding into their coffers. Sponsors were distracted by the day-to-day demands of running their own businesses. They happily accepted the assurance of actuaries that schemes were sound. They starved their pension schemes of the money they needed to run their operations effectively. Deficiencies in administration made it easier for the late Robert Maxwell to loot the Mirror pension fund in 1987. It would be wrong to assume automatically that trustees run their schemes badly. The recent takeover of Corus by the Tata Steel of India, for example, was expedited by the efficient way in which its British Steel pension fund has been managed over the years. On occasion, trustees have also been capable of innovation. In the late 1940s, the trustees to the Imperial Tobacco pension scheme accepted the argument of George Ross Goobey that equities yielding 5% were a far better bet than UK bonds returning 2.5%. Respect for this view encouraged other schemes to invest in equities in the years that followed.