Following on from our last blog update about public sector pensions, today's papers make much of the latest controversy around MPs' pensions. Frankly, even I'm struggling to come up with a defence for providing such a generous scheme at the taxpayers' expense, and Ros Altmann explains more eloquently than I why MPs' pension arrangements elicit such rancour.
One area in which pension funds, and other investors, are likely to assume a higher profile in the coming days is over the trouble brewing at Marks & Spencer, ahead of the company's AGM in a couple of weeks' time. As Richard Fletcher points out in today's Telegraph the M&S boardroom has resembled a soap opera in recent times. The latest cliffhanger surrounds growing shareholder pressure on Sir Stuart Rose to relinquish his executive chairmanship, which runs counter to best practice as set out in the Combined Code on corporate governance. According to corporate governance advisers PIRC, Sir Stuart's role is "a significant breach" of the Code, which seeks to guide companies on how best to run themselves in accordance with principles agreed by shareholders and directors, and which advocates the separation of roles of Chairman and Chief Executive, mainly to avoid the concentration of power in one pair of hands.
The Financial Reporting Council is currently consulting on potential changes to the code, and among the long list of names who have responded to the consultation is a certain leading High Street retailer. Among other points raised in Marks & Spencer's response is the suggestion that it would be "helpful to differentiate between the roles of chairman and chief executive being combined and the chief executive stepping up to be chairman". A point which corporate governance advisers such as PIRC would presumably endorse.
AF
Thursday, June 25, 2009
Thursday, June 4, 2009
Public sector pensions
4 June 2009
Changes to Defined Benefit pension schemes run by BP and Barclays have hit the headlines this week. They're widely acknowledged to be setting the trend for further announcements in the coming weeks by other blue chip employers faced with similarly daunting pension liabilities.
One side-effect of these announcements is likely to be renewed media interest in the sustainability of DB pensions in the public sector. As one City editor writes today, "this week's actions by Barclays and BP emphasise the need for the next government – in the interests of fairness – to confront the huge taxpayer cost of public sector pensions."
If I had a pound for every time the press used the term "gold-plated" in relation to public sector pensions, I could probably retire tomorrow.
Tragically, I've been unable to negotiate such an arrangement. Twelve years of working for various government departments in the 1980s and '90s, however, mean I am a deferred member of the civil service pension scheme. This means that in 2024, taxpayers (including millions of public sector workers) will have to pay me a lump sum of about £12,000, and then about £4,000 a year until my death (which, on these figures, is more likely to be caused by hypothermia than choking on fois gras). These may or may not be typical numbers, but certainly very few people will be taking Goodwinian sums from public sector pension schemes.
So, in anticipation of the wave of opprobrium about to descend on my fellow public sector pension scheme members, I'd urge you to consider this thought provoking analysis. And to bear in mind that a critical proportion of the electorate are either active or deferred members of public sector schemes.
AF
Changes to Defined Benefit pension schemes run by BP and Barclays have hit the headlines this week. They're widely acknowledged to be setting the trend for further announcements in the coming weeks by other blue chip employers faced with similarly daunting pension liabilities.
One side-effect of these announcements is likely to be renewed media interest in the sustainability of DB pensions in the public sector. As one City editor writes today, "this week's actions by Barclays and BP emphasise the need for the next government – in the interests of fairness – to confront the huge taxpayer cost of public sector pensions."
If I had a pound for every time the press used the term "gold-plated" in relation to public sector pensions, I could probably retire tomorrow.
Tragically, I've been unable to negotiate such an arrangement. Twelve years of working for various government departments in the 1980s and '90s, however, mean I am a deferred member of the civil service pension scheme. This means that in 2024, taxpayers (including millions of public sector workers) will have to pay me a lump sum of about £12,000, and then about £4,000 a year until my death (which, on these figures, is more likely to be caused by hypothermia than choking on fois gras). These may or may not be typical numbers, but certainly very few people will be taking Goodwinian sums from public sector pension schemes.
So, in anticipation of the wave of opprobrium about to descend on my fellow public sector pension scheme members, I'd urge you to consider this thought provoking analysis. And to bear in mind that a critical proportion of the electorate are either active or deferred members of public sector schemes.
AF
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