In navigation, there is the one-in-60 rule, which states that if you fly one degree off your plotted course, after 60 miles, you will be one mile adrift of your intended position. Philip Broadley, a keen pilot and chief financial officer of Prudential, uses the rule to illustrate the problem of valuing pensions. ”To be able to navigate to within one degree using just a map and a compass is skilful,” he says. ”With pensions, trying to predict some sort of precise course for how your liabilities are going to extend out works in the same way – you can’t navigate precisely the further out you go so there will be some drift.”

Pensions have rarely been out of the headlines in recent years. Issues have ranged from the dramatic shift away from defined benefit to defined contribution plans and the abolition of tax credit for funds, to the upheaval caused when accounting changes resulted in wild swings in stated surpluses and deficits. On top of this are the perennial problems associated with choosing the right assumptions when attempting to value liabilities that stretch into decades, which become increasingly hard to measure with any accuracy the further away they are. ”You almost want to say whatever this number turns out to really be in 30 years time, I can almost guarantee you it won’t be the one in front of you now,” says one finance executive.