Pensions Mess

The pension system for the country and for industry is in a complete mess – far worse than the media coverage would suggest.

Altering the retirement age for pension purposes and ending compulsory retirement are measures intended to demonstrate that we can’t afford the state pension system that we currently have, but that doesn’t really emphasise what a ghastly mess pension provision in general is in.

The news (reported recently) that the total pension deficit of the FTSE 100 (Britain’s biggest companies amounts to an estimated £73 billion, with BT, British Airways and Invensys having pension liabilities which are more than double their market value at £43bn, £16.8bn and £5,4bn respectively, is scary to say the least and shows that private pension provision is no better than the state’s.

Add to the mix the reports over the last few years of senior executives, top civil servants, politicians and BBC execs with gold-plated pension ‘pots’ and the picture emerges of fundamental flaws in the whole approach to pension planning and a poor regime for its reform and control.

There will have to come a time (soonish) when we recognise that our attitude to pensions is no better than our attitude to climate change, ie we think we can squander resources now and hang the consequences.

Large companies (and especially the state funded BBC) show that senior executives have manipulated their pension schemes to their advantage with scant regard for the future consequences and burden that their greed will create. It is an abuse of power and sooner rather than later action will have to be taken. There is no real justification for the high pensions that too many now qualify for. What about a legislative cap of say £150,000 pa for a start?

Just as we are told we can’t afford to tolerate benefit fraudsters at the lower end of the social scale, we can’t afford pension benefit abusers at the other end either.

Published on Aug 17, 2010 by Neil Thomas