How We Were All Lulled Into a False Sense of Security

This article is not about conspiracy. It is about something more mundane and, in some ways, more troubling: the way reasonable behaviour, consistently repeated over a long period, creates expectations that feel as solid as contractual rights. And then, one day, they stop — without announcement, without explanation, without anyone at all admitting that something has changed.

Members of the Johnson & Johnson UK Group Retirement Plan were lulled into a false sense of security. The lulling was not deliberate. It was the natural consequence of a decades-long pattern of behaviour — generous, consistent, and ultimately misleading — that left members wholly unprepared for what would happen when the pattern quietly ended.

This article traces that pattern from its origins in the 1980s through to the present day, using official documents that are now in the public record. The numbers in this article come from audited group accounts filed at Companies House, from published actuarial reports, from annual trustees’ reports and newsletters, and from summary funding statements issued to members. Nothing here is disputed. The question is simply whether anyone ever told you.

Phase One: The Years of Generosity (1984–2014)

The Johnson & Johnson UK pension scheme was established as a contributory defined benefit plan. The 1986 group accounts filed at Companies House describe it simply: “The company pension scheme is contributory and provides all members with a pension on retirement, determined by the employees’ earnings.” An actuarial valuation had been carried out in 1984. Both company and employees were paying in. The scheme was functioning as designed.

Then the 1980s bull market ran. Equity values soared. By the time the April 1990 actuarial valuation was carried out, the fund held assets of £95,129,084 — sufficient to cover 119% of all accrued member benefits. The scheme had more money than it needed. Under UK accounting standards of the day, this created an opportunity.

The 1991 group accounts — Johnson & Johnson Management Limited, registered number 00203555, filed at Companies House — state it plainly:

“There has been a change in the funding policy of the Group. In the previous actuarial valuation the funding approach was based on more conservative assumptions than the accounting policy. Accounting and funding policies are now based on the same actuarial method and assumptions. Whilst, for accounting purposes, the impact of any surplus or deficit is spread over the expected service lives of current employees, for funding purposes the overall surplus within the main pension scheme is being reduced through a contribution holiday.”

In plain English: the employers stopped paying regular contributions into the pension fund. Contribution holidays were common and entirely legal. What makes this significant is what happened simultaneously.

In the first years of the holiday, the J&J UK companies, on the recommendation of the Trustees, were still granting discretionary increases to pensioners every year. The April 1995 issue of Pensions News — the Trustees’ report to members for the year to 31 March 1994 — records that “this is at least the 10th straight year that the Companies have been able to make an increase to pensions in payment”:

Source: J&J UK Group Retirement Plan, Pensions News, April 1995 (Trustees’ Report to Members for the year ended 31 March 1994)

The newsletter added: “Please remember that, under the Plan rules, there is no provision for automatic increases and any increase given is at the discretion of the Trustees and the Companies.” The disclaimer was there. But set against ten consecutive years of increases, the last five of them granted while the employers were on a contribution holiday, it read as a legal formality rather than a genuine warning.

The fund kept growing. The 1996 trustees’ report confirmed the fund had grown from £163.2 million at 31 March 1995 to £200.8 million at 31 March 1996 — a 23% rise in a single year, driven by equity investment returns. The April 1996 actuarial valuation showed the fund at 136.5% funded. Members had every reason to believe this was simply how things worked at J&J. But the annual increases had in fact stopped. The April 1994 award in the table above is the last of that run: the Association has found no evidence of any discretionary increase between then and April 2002 — a gap of almost eight years, while the fund was in surplus and the employers were paying no regular contributions. Yet in May 1997, in the middle of that gap, the Plan newsletter told members: “Within the current rules of the J&J Plan pensions are reviewed annually and the Plan has a history of making discretionary increases from time to time.”2[2]J&J UK Group Retirement Plan newsletter, May 1997, “Keeping up with inflation”.

Strikingly, the Company’s own accounts went on assuming increases even after they had stopped being paid. From 1993 to 1999, the Johnson & Johnson Management Limited group accounts record that the accounting valuation of the pension scheme allowed for the possibility of the trustees granting discretionary pension increases, assumed at 5% a year on pensions above the Guaranteed Minimum Pension. That wording no longer appears from the 2000 accounts onwards. For most of the years it covers — from 1995 — no increase appears to have been granted.1[1]Johnson & Johnson Management Limited (company no. 00203555), group accounts for years ended 1993 to 1999 (pension note), Companies House.

This was not accidental. Three former company-appointed trustees of the scheme have confirmed to J&J Pensioners Network that, during their time as trustees, they sought — where possible — to “keep members’ purchasing power whole,” and that when asked by members, they confirmed this directly to them. In other words, the consistent pattern of increases was a deliberate trustee objective, communicated to members at the time, not simply a by-product of favourable markets. That level of trust meant the change in approach went unnoticed by most members for more than a decade — from 2014 until 2025.

The Companies House accounts record the pension cost charged each year — an accounting provision, not cash paid into the fund — and the actuarial valuations reported at the time:

Source: Johnson & Johnson Management Limited group accounts, Companies House (company no. 00203555), years ended 1990–2001. All figures from audited financial statements.

The same accounts show what the holiday was worth to the employers. Under the accounting standard then in force (SSAP 24), any pension cost charged in the accounts but not paid into the fund was carried on the balance sheet as a provision. By the end of 1993 that provision stood at £12.1 million, almost exactly the total cost charged since 1990, which means virtually nothing had been paid in. It then grew every year, to £58.4 million by December 2000 and £65.9 million by December 2001. In other words, around £60 million of pension cost was charged to the companies’ profits but never paid into the fund. That is equivalent to around £140 million in today’s money, using RPI. It is a conservative figure: the accounting cost had already been reduced to reflect the surplus, so the full regular contributions the employers would otherwise have paid were higher.1[1]Johnson & Johnson Management Limited (company no. 00203555), group accounts, pension notes: provision for pension obligations £12.1m (FY1993), £17.4m (FY1994), £22.4m (FY1995), £27.7m (FY1996), £35.0m (FY1997), £43.0m (FY1998), £51.0m (FY1999), £58.4m (FY2000), £65.9m (FY2001). Today’s-money figure: Association calculation using the ONS September RPI series. Group figures cover the companies consolidated in J&J Management Limited.

The employers’ regular contributions did not resume until January 2005.3[3]J&J UK Group Retirement Plan, Trustee’s Reports for the years to 31 March 2004 and 31 March 2005: special contributions of £31.6 million (December 2002) and over £17 million (December 2003); 2004/5 employer contributions were “normal contributions made from January 2005 only”; and “an exceptionally high level of retirements as a result of the closure of the Ethicon Edinburgh plant.” The fund grew regardless — driven by equity returns — while the companies’ profits were relieved of the contribution cost.

During the contribution holiday, the employers paid no regular contributions to the main pension scheme.

In the early years of the holiday, the companies also granted discretionary increases to pensioners, year after year.

No member was ever told that both were happening at the same time.

Phase Two: The Equity Crash and the Recovery (2000–2025)

The dot-com crash changed everything. Between 2000 and 2003, equity values collapsed. The actuarial valuation as at 1 April 2002 identified a shortfall, and the employers made special contributions of £31.6 million in December 2002 and over £17 million in December 2003 to help offset the fall. Regular contributions resumed in January 2005.3[3]J&J UK Group Retirement Plan, Trustee’s Reports for the years to 31 March 2004 and 31 March 2005.

What followed was a decade and a half of painful repair. The annual trustees’ reports, audited financial statements, and individual company accounts filed at Companies House record every year of it:

† The 2014/15 figure includes a £114.5 million Section 75 statutory debt payment triggered by the sale of Ortho-Clinical Diagnostics. This was a legally compelled payment, not a voluntary contribution. Excluding it, normal contributions that year were approximately £65.7 million. Sources: J&J UK Group Retirement Plan Annual Trustees’ Reports 2006–2016; Annual Reports and Accounts 2021–2025; Janssen-Cilag Limited accounts (Companies House no. 01027904) 2013–2024; J&J Medical Limited accounts (Companies House no. SC132162) 2013–2024.

The Association has verified these figures against multiple independent sources. For the confirmed years alone, total employer contributions between January 2005 and March 2025 amount to £915 million. Including the four estimated years (2016/17–2019/20), the total is approximately £1.25 billion — around £1.9 billion in today’s money.

Throughout the deficit years — even as the employers were pouring cash into the scheme to repair the damage — discretionary increases on pre-1997 pension continued to be granted. Special increases were paid in April 2002, September 2004 and October 2007, each at 90% of the Retail Prices Index. The last was 19.1%, effective 1 January 2014 and paid in December 2015 with backdated instalments; it caught up inflation from December 2006 to May 2013, with a cap of £1,000 a year. The administrator’s letter announcing it described 19.1% as “the level of inflation protection the Company has targeted for discretionary increases of this nature.”5[5]Plan administrator’s letter to pensioners, November 2015, on the special increase of 19.1% backdated to 1 January 2014, including the earlier special increases of April 2002, September 2004 and October 2007 at 90% of RPI.

At that point, after a tradition of increases — annual in the earlier years, periodic catch-ups thereafter — dating back to at least 1984, they stopped. The fund was on its way back to health: within three years it would be back in surplus. And the increases ended.

Phase Three: The Return to Surplus — and What Was Different This Time (2014–2026)

After 2014, the scheme’s funding position improved. The Summary Funding Statements sent to members tell the story:

Sources: 2018 Summary Funding Statement; 2023 Scheme Funding Report; J&J CARE Plan Annual Reports and Accounts 2021–2025; Mercer actuarial report 31 March 2025. The reduction in assets between 2022 and 2023 reflects the February 2023 sectionalisation, not a deterioration in funding. The Plan’s 31 March 2026 valuation is now under way: the Trustee does not expect it to be completed before the first quarter of 2027 (statutory deadline 30 June 2027), and expects the next Summary Funding Statement in Q2 or Q3 2027.

The table reveals something that received no member communication at the time: the scheme returned to surplus as early as March 2017, with a funding level of 104%. Yet contributions did not fall — they rose. The scheme then fell back to 93% funded by March 2020 — primarily due to COVID-19 market disruption and lower interest rates — before recovering to 118% by March 2021. From then on, employer contributions dropped sharply and ultimately ceased. The employers have paid nothing towards member benefits since the scheme closed to accrual in April 2023.

Now compare this to what happened in the 1990s, when the scheme last had a large surplus. Then, in the early years of a contribution holiday, the employers were still granting discretionary increases every year. Now, contributions have again ceased — and this time the discretionary increases have not followed. Since January 2014, not one penny of discretionary increase has been granted on pension built up before 6 April 1997. On the pattern of 2002–2014, when the gap between awards was never more than about six years, a further increase would have been due by around 2020 at the latest. Even the longest gap on record — almost eight years, from 1994 to 2002 — would have put one due by around 2022. Since March 2023 alone, the surplus has risen from £424 million to £484 million, on £nil employer contributions towards benefits.

Phase Four: The Inflation the Newsletters Never Mentioned

While the fund recovered, inflation did not stand still. Using the official ONS September RPI figures that set each April’s pension increases, prices rose by about 67% across the thirteen April increase dates since the last award (April 2014 to April 2026). Pension built up after April 1997 received statutory increases throughout. Pension built up before April 1997 received nothing:

Source: ONS RPI, September readings (series CZBH), applied to the April increases of 2014–2026. Calculations by the Association; year-by-year workings in The Surplus Was Not Built by Good Management Alone.

A member whose pension was £10,000 a year in 2014, all of it built up before April 1997, still receives £10,000. To buy what £10,000 bought in 2014, they would now need about £16,650 — a shortfall of around £6,650 a year, and growing every April. Not because of any actuarial failure. Not because the fund ran out of money. But because the Company chose not to grant an increase, year after year, while the fund surplus grew to nearly half a billion pounds.

On the same scheme, over the same period, the gap between pre-1997 pension and pension built up between 1997 and 2006 is now about 30 percentage points — and it grows with every passing April.

What the Newsletters Said — and What They Did Not

The Association has assembled an archive of member communications going back to 1995. Read sequentially, they tell a story of gradual, barely perceptible change in what was being communicated — and a striking silence about what was not.

The 1990s newsletters are confident and generous in tone. The early ones report increases. They describe a well-funded scheme with strong investment returns. The April 1995 newsletter reports an 18.4% return on investments for the year ending March 1994, and that the actuary had confirmed the assets “fully covered all its liabilities.” The 1996 trustees’ report describes overall returns of 25.7% — “in the top 10%” of schemes measured by the WM Company.

What none of these communications mentioned was that throughout this period the employers were paying no regular contributions into the fund. The holiday was running. The surplus was being used instead of employer contributions. Members were being told the scheme was healthy — which it was — but not that the companies had stopped paying in, which was equally true.

The 2000s newsletters shift tone. Deficits are explained, carefully. Recovery plans are described. The Company’s commitment is praised. These newsletters are more transparent than their predecessors — they had to be, because the news was bad and members needed to understand why contributions were increasing.

And the increases were still explained in reassuring terms. In May 2002 — announcing the first increase for almost eight years — a special issue of Pensioner News told members that, “despite recent falls in global stock markets, they have received approval from the Company for an increase to pensions.” Plan newsletters in 2007, 2008 and 2010 carried a regular section headed “Looking after your interests”.8[8]J&J UK Group Retirement Plan, Pensioner News Special Issue, May 2002; Plan newsletters, August 2007, July 2008 and September 2010. As late as November 2015, the letter announcing the 19.1% increase called it “the level of inflation protection the Company has targeted”. It added that there was “no guarantee that future special increases will be provided”. There never was another.

Then the newsletters shift again. From 2014 onwards, the format changes. The focus moves to governance: online portals, pension scam warnings, GMP equalisation, the new CARE benefit structure. The December 2022 newsletter leads with: “Good news on the Plan’s funding level.” It reports funding levels of 93%, 118% and 117% over three consecutive years. It does not report that, as of January 2014, pre-1997 discretionary increases had stopped. It does not report that the fund was 118% funded and no increase had been granted for almost nine years. It does not report that members’ pre-1997 pensions were losing value every year to inflation.

The 2025 pensioner newsletter contains a helpful guide to spotting pension scams. It does not mention the £484 million surplus. It does not mention the Pension Schemes Act 2026. It does not mention that pre-1997 pension had then received no increase for over eleven years.

The sentence that should have been in every newsletter since 2014 — and was not:

“We are writing to inform you that, with effect from January 2014, the Company has decided not to grant any further discretionary increases on pre-April 1997 pension. This decision applies regardless of the scheme’s funding level. No future discretionary increases are currently planned.”

That sentence was never written.

The Credo and the Question It Raises

Johnson & Johnson’s Credo, written by Robert Wood Johnson in 1943, states: “We are responsible to our employees who work with us throughout the world. They must have a sense of security, fulfilment and purpose in their jobs. Compensation must be fair and adequate.”

The Association makes no legal argument from the Credo. It is a statement of values, not a contractual commitment. But values matter — particularly when they are cited by the company itself as the foundation of its corporate identity, and when the Association’s letter to J&J’s global chief executive in December 2025 explicitly asked what those values mean in the context of a £484 million surplus and pre-1997 pensions frozen since 2014.

The Credo says employees must have a “sense of security.” Members had exactly that — for three decades. They had it because the behaviour of the Company and the trustees consistently reinforced it: increases granted during the contribution holiday, and increases continued even during the deficit recovery years.

That sense of security mattered most when the Company restructured. When Ethicon closed its Edinburgh plant in 2005, the Plan’s Trustee recorded “an exceptionally high level of retirements as a result of the closure”.3[3]J&J UK Group Retirement Plan, Trustee’s Report for the year to 31 March 2005. When the professional wound care business at Gargrave was sold on 1 December 2008, 323 J&J employees transferred to the buyer and became deferred members of the Plan overnight. When the Kirkton plant at Livingston closed in 2017–18, J&J’s manufacturing there ended.9[9]GMB, General Secretary’s Report to Annual Congress 2009, Yorkshire & North Derbyshire Region, p. 148; Johnson & Johnson Medical Limited (Companies House no. SC132162), annual reports 2008, 2016, 2017 and 2018. Members who took AVCs, who deferred salary into pension contributions, who made retirement decisions — including early retirement when their plants closed — on the basis of what their pension appeared to be worth: they had every reason given to them to believe they were secure.

The question the Association is asking is not whether the law was broken. It is simpler: was that sense of security real? And if it was not — if the Company always retained an unlimited discretion to freeze pre-1997 pensions indefinitely regardless of funding levels — why was that discretion never clearly communicated to the members whose retirement income depended on understanding it?

“But Didn’t J&J Pay In Over a Billion Pounds?”

This is the objection the Association expects to hear, and it deserves a direct answer.

The documents confirm that between January 2005 and March 2023, the J&J group of companies paid approximately £1.25 billion into the UK Group Retirement Plan. It is a very large sum of money. The Association does not dispute it, minimise it, or pretend it did not happen.

But four things need to be clearly understood about what those contributions were and what they were not.

First, they were legally required. The contributions paid after January 2005 were paid under funding and recovery arrangements agreed with the trustee and certified by the scheme actuary. The emergency payments of December 2008 and 2009 — totalling £140 million — came after the 2008 financial crisis had cut the funding level to 63%. These were not gifts. They were obligations.

Second, the money paid in is not J&J’s money. Once contributed to a UK defined benefit pension trust, employer contributions are held on trust for members. The employer has no automatic legal right to recover them — which is precisely why the Pension Schemes Act 2026 was needed. The 2018 Summary Funding Statement confirmed: “We can confirm that there have never been any payments to the Company out of Plan funds.” That was true when written. The PSA 2026 is designed to make such payments easier.

Third, the surplus was not created by employer contributions. The 2023 Scheme Funding Report shows that employer contributions accounted for only £6.8 million of the £612 million improvement in funding between 2020 and 2023. The rest came from bond market movements — particularly the sharp rise in gilt yields from 2022, which reduced the value placed on the scheme’s liabilities by over £1.2 billion. J&J did not create this surplus. The bond markets did.

Fourth — and most significant: the £484 million surplus is calculated on the explicit assumption that pre-1997 members will never receive a discretionary increase. Every year since 2014 that an increase was not granted, the liabilities were lower than they would otherwise have been. Every year of real-terms erosion in pre-1997 pensions has contributed, in actuarial terms, to the size of the surplus the Pension Schemes Act 2026 framework would make easier for J&J to access.

The surplus was created primarily by bond market movements, not employer generosity.

It is calculated on the explicit assumption that pre-1997 members will receive no further discretionary increases — ever.

A surplus built in part on the backs of members whose purchasing power has fallen by around 40% since 2014 is not a pot of money that belongs unambiguously to the employer.

The Association’s position is not that J&J should receive nothing from the surplus. It is that before any surplus flows to the employer, the members whose deferred purchasing power contributed to its creation should be meaningfully addressed. The mechanism exists. The money exists. The only thing required is the Company’s agreement — the same agreement that was given, again and again, for three decades.

The Comparison That Speaks for Itself

A member with £20,000 a year of pre-1997 pension in 2014 still receives £20,000. To buy what that bought in 2014, they would now need about £33,300 — a shortfall of around £13,300 a year, every year, with no catch-up mechanism and no prospect of correction unless the Company agrees to act. The fund holds £484 million in surplus. The employers contribute £nil.

What Happens Next

The Pension Schemes Act 2026, which received Royal Assent on 29 April 2026, will from April 2027 make it substantially easier for sponsoring employers to receive payments from pension scheme surpluses. The Plan’s next valuation, as at 31 March 2026, is under way now and must be completed by 30 June 2027. The decisions that will shape how this surplus is used are being taken now.

The Association is asking for two things. First: that before any surplus is returned to the employer, the purchasing power of pre-1997 members is restored — or at minimum, meaningfully addressed. The mechanism to do this exists under the Plan’s rules: under Rule 38.3, the participating employers must review pensions in payment “at regular intervals not exceeding three years” and can direct the Trustee to increase them. The Statement of Funding Principles confirms that the Company can agree to finance discretionary increases. It simply has not done so for more than twelve years. Second: that members are given a genuine voice in decisions about a surplus that was built, in significant part, through the compounding effect of their own unincreased pensions.

Importantly, the Government’s own position supports this. Pensions Minister Torsten Bell, in a formal ministerial response to parliamentary correspondence c. December 2025, stated: “Trustees are within their rights to request conditions that include the payment of discretionary indexation to members as part of any agreement which leads to the release of surplus to the employer.”10[10]Torsten Bell MP, Minister for Pensions, ministerial response to parliamentary correspondence, c. December 2025. And in June 2026 the Pensions Regulator told trustees considering a release of surplus to weigh “whether members have a reasonable expectation to share in surplus, especially if discretionary benefits have been regularly granted.”11[11]The Pensions Regulator, statement on DB surplus, 10 June 2026 (updated 21 August 2026); Plan Rule 38.3, as quoted by the Trustee in its internal dispute resolution decision. Few schemes fit that description more closely than ours.

Neither of these asks requires breaking any law. Neither requires reversing any decision that has been made. They require only a willingness — from the Company, from the Trustee — to acknowledge that the people who spent their careers at J&J, and who trusted the pattern of behaviour they observed over decades, deserve to be part of the conversation about what happens to the money their contributions helped build.

The Credo says compensation must be fair and adequate.

A pension that has lost around 40% of its real value since 2014 — in a scheme with a £484 million surplus, on £nil employer contributions — is neither.